E Ink’s buyer sweetens the deal

Prime View International of Taiwan disclosed that it has modified its purchase agreement by offering E Ink shareholders convertible shares of Prime View in addition to the cash in the original agreement. If the market value of Prime View increases, the shares can be converted into common stock in the Taiwanese company.

The amended deal is “a win-win,’’ said Russ Wilcox, chief executive of E Ink. Wilcox said it reflects the fact that Prime View will benefit from the explosive growth E Ink has undergone in the months since the initial deal was signed. Its sales vaulted 250 percent for the first nine months of 2009 compared with last year. At the same time, Wilcox said, E Ink investors now will share in Prime View’s anticipated growth.

“Both parties understand that E Ink’s performance has made it more valuable,’’ Wilcox said in an interview. “As the value for E Ink started to climb, what had been a fair deal started to look less fair.’’

Prime View, a maker of electronic displays, is the largest customer of E Ink’s electronic ink: tiny capsules of positively charged white particles and negatively charged black particles that are used in screen displays Prime View assembles for the Kindle and other e-readers.

Industry analysts have projected steep market growth for the devices in the coming decade, though competition from rival platforms is mounting. Two technology giants, Apple Inc. and Microsoft Corp., are said to be working on computers that would incorporate the book-reading capacity of the Kindle along with other features.

Bill Trippe, senior analyst at the Gilbane Group consulting firm in Cambridge, said the Kindle still has significant advantages, including electronic rights to hundreds of thousands of books.

“In the long run, the total addressable market for these devices is enormous,’’ Trippe said. “It’s certainly enough for many players. As long as Amazon continues to make the Kindle more functional, it will be good for E Ink.’’

In the week after the E Ink deal was made public on June 2, some directors and major shareholders of the company contended Prime View was paying too little. The private company, founded in 1997 by Wilcox and four partners, has more than 100 shareholders, ranging from former employees to venture capital firms, hedge funds, and strategic investors.

Wilcox said yesterday that investors holding the majority of the company’s stock have indicated support for the amended agreement. He said it would be brought to a vote of all shareholders later this month.

Under the new deal, Prime View will grant 120 million convertible shares to E Ink shareholders. The shares can be converted into common stock over a three-year period if Prime View’s share price meets certain targets on the Gre-Tai Securities Market in Taiwan.

Robert Weisman can be reached at weisman@globe.com.