Eastman Kodak Company has entered into a definitive agreement to sell its flexographic packaging division to Montagu Private Equity.
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.
Kodak says that, under its new ownership, the business will have the same organisational structure, management team and growth culture. Chris Payne, who has served as president of the flexographic packaging division for the last three years, will lead the new company as chief executive officer.
Kodak says that, over the past five years, the flexographic packaging business has grown and thrived within Kodak and has become a significant player in the packaging print industry. It sees the business 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.
Kodak expects to receive total value of up to US$390m, comprised of the following components: base purchase price of $340 million, subject to purchase price adjustments; potential earn-out payments of up to US$35m over the period through 2020 based on achievement by the business of agreed-upon performance metrics; and US$15m 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.
Kodak will use the net proceeds from the transaction to reduce outstanding term debt. The company expects that it will refinance or repay the remaining outstanding term debt from additional asset sales.
Jeff Clarke, chief executive at Kodak, says, “This transaction is an important turning point in our transformation and is a significant, positive development for Kodak.
“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 says it will continue to focus on the demonstrated growth areas of Sonora environmental plates, enterprise inkjet, workflow software and brand licensing.
The company expects the transaction to close in the first half of 2019, subject to the receipt of required regulatory approvals and satisfaction of closing conditions.

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