Eastman Kodak Company (Rochester, New York) has entered into an agreement to sell its Flexographic Packaging Division to Montagu Private Equity, a leading private equity firm with offices across Europe. After closing, the business will operate as a new standalone company which will develop, manufacture and sell flexographic products, including the flagship Kodak Flexcel NX System, to the packaging print segment.
“Under its new ownership, the business will have the same organizational structure, management team and growth culture that has served Kodak’s Flexographic Packaging Division well in recent years,” said Kodak. Chris Payne, who’s served as President of Kodak’s Flexographic Packaging Division for the last three years, will lead the new company as its CEO. Over the past five years, Kodak’s flexographic packaging business has grown to become a key player in the packaging print industry. “The business will be well-positioned to continue delivering solutions to maintain profitable growth for printers in the packaging sector and remain at the leading edge of flexographic print production,” the company added.
Kodak expects to receive total value of up to $390 million, comprised of a base purchase price of $340 million subject to purchase price adjustments, potential earn-out payments of up to $35 million over the period through 2020 (based on achievement by the business of agreed-upon performance metrics), and $15 million payable by Montagu to Kodak at the closing as a prepayment for various services and products (to be provided by Kodak to the business post-closing pursuant to commercial agreements, subject to completion of certain pledge and collateral arrangements). The net proceeds from the transaction will be used by Kodak to reduce outstanding term debt. Kodak expects that the remaining outstanding term debt will be refinanced and/or repaid using cash proceeds from additional asset monetizations.
“This transaction is an important turning point in our transformation and is a significant, positive development for Kodak,” said CEO Jeffrey J. 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.” Following this transaction, Kodak said will continue to focus on its demonstrated growth areas of Sonora environmental plates, enterprise inkjet, workflow software and brand licensing. The transaction is expected to close in the first half of 2019, subject to the receipt of the required regulatory approvals and the satisfaction of all closing conditions.