Amazon to buy US$ 400 million Kornit product over five years

Kornit to triple digital textile sales to Amazon

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Kornit Digital's award winning textile printer Photo Kornit
Kornit Digital's award winning textile printer Photo Kornit

Last month, Kornit signed a deal with Amazon to triple sales of its direct-to-garment printers to the eCommerce and technology giant. At the same time, Kornit conducted its fourth share offering in the past two and a half years.

Kornit issued two million new shares worth US$ 124 million while a unit of Amazon, which owns 4.75% of Kornit, sold 1.6 million of its shares for another US$ 100 million in the share offering. Amazon acquired its shares in Kornit from 2017 onwards for US$ 13.33 a share, in a vesting agreement tied to payments made by Amazon for the purchase of goods and services from Kornit Digital since May 2016.

Amazon has signed a new agreement, an expanded version of the one it has had with Kornit since January 2017 – Kornit will issue warrants entitling Amazon to 3.1 million shares or 8% of its issued share capital diluted. The warrants will be exercisable at US$ 59.26 per share compared with the closing price of US$ 62.74 on the Nasdaq on 14 September 2020.

Amazon has committed to buying products and services from Kornit totaling US$ 400 million over the next five years – US$ 250 million in existing products such as digital printers, inks, and services in exchange for warrants convertible into 1.9 million shares, and US$ 150 million in future products in exchange for warrants for 1.5 million shares. The warrants will be allocated in tranches each time Amazon buys products or services worth US$ 5 million.

Amazon has used Kornit products for providing its Merch by Amazon service, enabling designers to sell customized garments and personalized T-shirts. Amazon handles production, shipping, and collection. Now Amazon wants to expand its digital printing to other home furnishings, upholstery, bedspreads, and sports equipment for which it plans to use the new Kornit’s Presto printer.

Ronen Samuel, the CEO of Kornit Digital, indicated that the agreement marks a turning point for Kornit making it a huge company. And that the sales target of US$ 500 million in 2023 will be achieved only through organic growth. Kornit’s digital printers are utilized to print for the top ten brands in apparel and fashion.

Kornit customer, investor, shareholder

The biggest user of its printers is Amazon, which accounted for 8.5% of sales in the second quarter of this year. Digital printing experts say that Amazon only executes those businesses in-house that are profitable while outsourcing the lower margin products and services to third party suppliers. The exploding demand for personalized fabrics and garments bodes well for the digital textile and direct-to-garment printers.

The new deal with Kornit in which Amazon is an investor is also an impressive financial and business arrangement. When Amazon buys Kornit printers and inks, it gets warrants that can be turned into shares at a fixed price. While Kornit can periodically leverage cash from issuing new shares as it grows, simultaneously, Amazon can also sell some of its shares profitably to finance its expansion.

In 2024, we are looking at full recovery and growth-led investment in Indian printing

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. It created the category of privately owned B2B print magazines in the country. And by its diversification in packaging, (Packaging South Asia), food processing and packaging (IndiFoodBev) and health and medical supply chain and packaging (HealthTekPak), and its community activities in training, research, and conferences (Ipp Services, Training and Research) the organization continues to create platforms that demonstrate the need for quality information, data, technology insights and events.

India is a large and tough terrain and while its book publishing and commercial printing industry have recovered and are increasingly embracing digital print, the Indian newspaper industry continues to recover its credibility and circulation. The signage industry is also recovering and new technologies and audiences such as digital 3D additive printing, digital textiles, and industrial printing are coming onto our pages. Diversification is a fact of life for our readers and like them, we will also have to adapt with agility to keep up with their business and technical information needs.

India is one of the fastest growing economies in nominal and real terms – in a region poised for the highest change in year to year expenditure in printing equipment and consumables. Our 2024 media kit is ready, and it is the right time to take stock – to emphasize your visibility and relevance to your customers and turn potential markets into conversations.

– Naresh Khanna

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