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EDITOR'S notebook

February 2005
Kodak Takes Industry By Storm With Deals

It wasn't a big surprise when Eastman Kodak bought out Heidelberg's 50 percent stake in their Rochester, NY-based NexPress Solutions joint venture in May of last year, or even when Kodak acquired Dayton, OH-based Scitex Digital four months earlier. But two back-to-back announcements last month that it has purchased Sun Chemical's half interest in its Kodak Polychrome Graphics (KPG) joint venture and plans to acquire Creo Inc. outright certainly have many industry pundits and Wall Street analysts taking notice. Combined, the KPG and Creo acquisitions by Eastman Kodak will total almost $1.8 billion.

Kodak's Graphic Communications Group (GCG) has a big job ahead of it to rationalize and integrate its new holdings (KPG and Creo) with its five existing businesses (NexPress, Encad, Kodak Versamark, Document Imaging and Business Process Services). Two operating units have been announced, with former KPG CEO Jeff Jacobson being named COO of the Graphic Solutions & Services unit. Jacobson will be responsible for integration of the R&D, commercialization, manufacturing, product marketing and administrative functions of Encad, NexPress, KPG—and now Creo—into a single organization. Similarly, Kodak Versamark CEO Nachum "Homi" Shamir will lead the integration of Kodak Versamark, the Document Imaging business of Kodak Document Products and Services, and Business Process Services into Kodak's new Transaction & Industrial Solutions unit.

In conference calls with analysts and the graphic arts trade press following the two acquisition announcements, Kodak GCG President James Langley was understandably unresponsive about specific questions concerning future staffing, facility rationalization and product portfolios once the integration takes shape. The KPG deal is expected to close in April and the Creo acquisition will close in three to five months, assuming Creo shareholder approval at a scheduled March 29 meeting.

And while the KPG acquisition by Kodak resulted in limited product overlap and few conflicts concerning existing KPG agreements with other industry suppliers, the Creo deal appears to be more intriguing. For example, Creo has an existing agreement with Xerox to sell certain Xerox digital presses and to offer the Creo Spire front end controller as an option for several Xerox digital devices. (Conflict: NexPress and Kodak Versamark.) Similarly, in January Creo announced that DuPont will begin selling a new version of the Creo Veris proofer coupled with DuPont's Cromanet color management and Cromalin ink and media. (Conflict: KPG.) Those supplier agreements seem in jeopardy going forward.
 

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