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Business

Kodak reaches agreement in sale of flexo division

Kodak has reached an agreement with private equity firm Montagu for the sale of its flexographic and packaging division, which it put up for sale in August 2018.

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The firm is selling its flexo and packaging division to focus on commercial printing, film and advanced materials

According to Kodak, the business will operate as a new standalone company which will “develop, manufacture and sell flexographic products,” including Kodak’s Flexcel NX system.

Chris Payne, who has held the position of president of the flexographic packaging division for the last three years, will lead the new company as chief executive officer. The structure of the company will remain largely unchanged.

The company expects to receive up to $390m (£302m) for the sale, based on three components: a base purchase price of $340m (£264m) subject to adjustments, potential earn-out payments of up to $35m (£27m) over the period until 2020 based on achievement by the business, and $15m (£12m) payable by Montagu to Kodak as a prepayment for services and products provided to the business following the completion of pledge and collateral arrangements.

This transaction is an important turning point in our transformation and is a significant, positive development for Kodak

“This transaction is an important turning point in our transformation and is a significant, positive development for Kodak,” says Kodak chief executive officer Jeff Clarke. “The sale of the Flexographic Packaging Division unlocks value for shareholders and strengthens our financial position by providing a meaningful infusion of cash which allows us to reduce debt, improving the capital structure of the company and enabling greater flexibility to invest in our growth engines.”

News of the sale saw Kodak shares rise 18.45 percent yesterday (November 12th) closing at $3.66 (£2.84). The firm reported its net earnings for Q3 of $19m with a strong performance from its process-free and environmentally-friendly SONORA plates.

The funds will be used to reduce the company’s outstanding debts. The sale is expected to be finalised in the first half of 2019, subject to regulatory approvals and closing conditions.

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