AGT to Buy Devon Group

NEW YORK—There’ll soon be one fewer publicly traded graphic arts company, and the already muscle-bound Applied Graphics Technologies (AGT), which reported total 1997 revenues of approximately $185 million, will get even stronger. That’s the upshot of news that AGT and the Devon Group have signed a merger agreement.

After the transaction, Devon will operate as a wholly owned subsidiary of AGT, and Devon’s principal subsidiaries will continue to operate in their present form. Marne Obernauer Jr., Devon’s chairman and CEO, will become vice chairman of AGT and a director. One other designee of Devon will also join AGT’s Board.

What Devon brings to the table is its strong Black Dot digital prepress subsidiary, with annual revenues of approximately $133 million last year. Black Dot specializes in providing outsourced facilities management services to major retailers and has substantial long-term contracts with Sears and Kmart.

Officials say the merger makes AGT the nation’s largest provider of outsourced digital image management and digital prepress services to publishers, retailers, advertising agencies and automobile manufacturers.

Devon also operates a business that publishes and distributes images in a variety of formats, such as greeting and note cards, posters, matted prints, art reproductions, calendars and related products. Its fiscal 1997 revenues were approximately $77 million.

Under the agreement, holders of Devon common stock will receive, for each Devon share, $30 in cash and a tax-free distribution of 0.6 of a share of AGT common stock.

Assuming a market price of $50 per share for AGT stock, the transaction equates to a total value of approximately $440 million, or $60 per Devon share.

The transaction is expected to be completed by the end of this quarter.

According to Fred Drasner, AGT chairman, “The combination with Devon will clearly establish AGT as the industry leader, and the largest company, in the outsourced digital image management and digital prepress areas.

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