The writing is on the wall for more consolidation in the world of startups… both literally and figuratively. Today Anoto, a digital writing company based out of Sweden, announced that it would acquire longtime partner Livescribe, another a smart pen maker, for $15 million in a deal that is expected to close this month.
Specifically, Anoto says this is an all-cash deal and is based upon an enterprise value of $15 million “equal to estimated annual sales for 2015.”
This is a bargain of sorts, but a poor return for investors: Oakland-based Livescribe, founded in 2007, had raised at least $68 million from backers like Qualcomm, Crosslink Capital and Scale Venture Partners.
To finance the acquisition, Anoto says that it has signed a placement agreement with Sweden’s Carnegie Investment Bank AB to issue 158 million shares in Anoto, for a dilution of a maximum of 15%. Anoto has also taken a short-term loan of $2.9 million (25 million Swedish crowns).
Livescribe was one of the early leaders in smart pen technology — and by default one of the early movers in the whole area of Internet of Things and turning “dumb” objects into connected pieces of hardware.
But it also faced some significant stumbling blocks. Among them, it lost a trademark case in 2013 against UK pay-TV company BSkyB over the use of “Sky” for one of its WiFi-connected pen models. In turn, the Sky wifi smartpen was renamed the more pedestrian “wifi smartpen.”
Livescribe is selling its business operations, technology, and intellectual property. “The Livescribe brand and existing infrastructure will be retained, with a goal of strengthening the position of both companies through the development and sale of new products,” the companies say in a separate joint statement.
By acquiring Livescribe, Anoto is widening the kinds of products it’s developing and selling.
“Acquiring Livescribe is another important step in consolidating the Anoto ecosystem and realizing synergies in hardware and software development, supply chain and operations, and sales distribution,” said Stein Revelsby, CEO of Anoto, said in a statement. “We are already working on a new range of products to be launched in Livescribe’s sales channels in 2016.”
The Swedish company has in the past worked to provide digital solutions for any kind of writing, from notes through to interactive displays and large walls. Livescribe is more about developing handheld styluses for smaller surfaces. That narrowed focus may have been a boost for developing quality, but it perhaps was also one of its problems as a company, considering the large amount competition in this space, from other startups like Paper to large tech companies like Apple designing its own “native” digital ‘pencil’.
“By joining forces with Anoto, we see huge potential for smartpen technology to expand beyond the consumer market and beyond writing and drawing on paper,” said Gilles Bouchard, CEO of Livescribe in the same statement. “We’ve had a successful licensing partnership with Anoto since Livescribe was founded and I am confident that becoming part of Anoto Group will strengthen Livescribe’s position in the consumer market and allow us to pursue many exciting new opportunities in the years to come.”
It looks like this is Anoto’s first acquisition.