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Eastman Kodak Buys Out KPG, Nears Deal to Acquire Creo

February 2005
ROCHESTER, NY—Eastman Kodak moved to gain sole possession of Kodak Polychrome Graphics (KPG) on January 12 with a proposal to purchase Sun Chemical's 50 percent interest in the joint venture for $817 million, then shocked the industry later in the month with the news that it was acquiring Creo for about $980 million.

Kodak will redeem all of Sun Chemical's shares in KPG for $317 million in cash at closing, $200 million in cash in the third quarter of 2006, and $50 million in cash annually from 2008 through 2013. The transaction is expected to close in April.

The pending Creo acquisition, at a cash price of $16.50 per share, ends months of speculation regarding the future of the Vancouver-based company. A small group of dissident shareholders led by former Moore Corp. CEO Robert Burton had sought to gain control of Creo during this month's originally scheduled annual and special meeting. Following the Kodak agreement, the dissident group declared that its objectives had been met and announced it would discontinue efforts to take over the firm.

The deal is slated to close within three to five months, pending traditional regulatory approval.

These buyouts are said to conclude Kodak's current acquisition program for its Graphic Communications Group (GCG). Previously folded into this group were wide-format ink-jet printer specialist Encad Inc., high-speed ink-jet systems manufacturer Kodak Versamark, and digital color and monochrome press supplier NexPress Solutions, along with Kodak's Document Products and Services (DPS) operations that provide high-speed document scanners and office equipment maintenance services.

Upon completion of the KPG acquisition, its CEO, Jeff Jacobson, is to become COO of GCG and president of the group's new Graphic Solutions & Services operating unit. Jacobson will report to James Langley, GCG president and senior vice president of Eastman Kodak.

Creo's operations are to become part of that same business unit when the transaction closes.

"Combining Kodak's, KPG's and Creo's portfolios will give customers what they want—a single supplier for their graphic communications needs," Langley asserts. "We will be able to marry our digital presses with Creo's prepress offerings, including their market-leading workflow, to accelerate growth."
 

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