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Déjá Vu All Over Again for Kofax

Reynolds Bish is back at the helm of the software company he positioned for a $1 billion sale to Lexington, Kentucky-based Lexmark International Inc. less than two years ago.

And it appears his top priority is to repeat the feat.

Bish has resumed his role as chief executive of the re-established Kofax brand, and will once again lead the company from Irvine. The unit has separated from the Lexmark operation “in a process to sell the business,” according to the company.

He had been president of Lexmark Enterprise Software, which was established in mid-2015 after its parent acquired Irvine-based business software maker Kofax Ltd.

Bish, who helped craft the integration plan with Lexmark executives after the sale, couldn’t comment on the sales process, a spokesperson told the Business Journal.

Lexmark Enterprise Software entered the year as the seventh largest software maker in Orange County, with 300 local workers, according to Business Journal research. It had about 13,000 employees companywide.

Kofax’ scanning software is used by more than 25,000 customers worldwide and intended to streamline the flow of information, eliminate paper, reduce costs and improve customer service.

The company had annual revenue of nearly $300 million before its sale.

The latest development was prompted by the recent $3.6 billion sale of Lexmark International to a consortium of Chinese investors that included Legend Capital Management Co. Ltd. in Beijing and two Hong Kong-based companies: electronics manufacturer Apex Technology Co. Ltd. and PAG Asia Capital, an independent alternative investment firm that manages $16 billion in capital.

Lexmark said it would focus on growing its core imaging business in the wake of the sale, particularly in China and the other Asia-Pacific markets. 

The deal is the latest example of China’s growing influence on the global business stage, including Orange County—two of the largest foreign-owned companies with significant operations and employment here have recently come under Chinese ownership, with a third in the works and another with deep ties to the Middle Kingdom.

Irvine-based Ingram Micro Inc., the world’s largest technology products distributor, with sales of $43 billion in 2015, was sold in December for $6 billion to conglomerate Tianjin Tianhai Investment Co. Ltd.

Costa Mesa-based Karma Automotive LLC was purchased in a 2014 bankruptcy court auction for $149 million in cash by Wanxiang Group Corp., one of the largest auto parts makers in China.

Broadcom Corp. a year ago was sold for $37 billion to Singapore-based Avago Technologies Inc., which renamed the combined entity Broadcom Ltd. and established its U.S. headquarters in San Jose. Singapore, an influential island nation with a strong manufacturing sector, has a population that’s about three-quarters ethnic Chinese.

Irvine-based Vizio Inc., one of OC’s largest private companies, with $3.5 billion in annual sales, agreed to a $2 billion sale in late July to Chinese conglomerate LeEco. The transaction was set to close late last year but hasn’t received the final approval from Chinese regulators as tension mounts in U.S.-China business relations amid harsh criticisms from President Donald Trump, who halted U.S. participation in the Trans-Pacific Partnership, a move that underscores his “America first” agenda but that could further China’s globalization efforts, according to some international economists and analysts.

Expect Kofax to attract a sales price in the ballpark of $1.5 billion, considering its strong base of enterprise customers. Potential bidders include Open Text, Thomas Bravo, Xerox and Oracle, according to industry tracker Document Industry Report, which also alluded to a possible management buyout led by Bish and Carl Mergele, an executive vice president at Lexmark ES.

Both executives have had success driving up valuations and selling companies.

Irvine Born, British Roots

Kofax got its start in Irvine in 1985.

The company was publicly traded for years in the U.K., where its former holding company parent, Dicom Group PLC, went public in 2011.

Kofax was among at least four local companies to attract investments from In-Q-Tel, a private venture group funded by the CIA.

Others included Irvine-based security software maker Cylance Inc.; PlateScan, a Newport Beach-based maker of license plate recognition software; and chipmaker WiSpry Inc., also in Irvine, which was acquired in 2015 on undisclosed terms by Hong Kong-based AAC Technologies Holdings Inc.

The investment in Kofax by the CIA-linked fund came in 2004, and aimed to advance technologies for “document exploitation,” which is the analysis and use of documents to extract actionable information. 

Kofax officially moved its headquarters to Irvine—long its operational base—in 2008.

The company began trading on the Nasdaq in December 2013 under the symbol KFX, raising $11 million in an initial public offering. The move—the first IPO in the local tech sector in several years—aimed to boost awareness and reflect the company’s changing base of investors as it further distanced itself from its U.K. roots.

Kofax’ short stint as a U.S. public company ended with a bang, attracting a nearly 50% premium on its share price in the sale to Lexmark International.

Bish indicated at the time that he didn’t intend to stay on long term—six months to a year.

“If there’s an interesting challenge approaching, I would also be happy to consider that,” he told the Business Journal in April 2015.

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