Kodak reaches agreement with Montagu for sale of Flexographic Packaging Division

151

November 2018 — Rochester, NY-based Eastman Kodak Company has announced that it has entered into a definitive agreement to sell its Flexographic Packaging Division to Montagu Private Equity LLP, a leading private equity firm. After the deal closing, the business will operate as a new standalone company which will develop, manufacture and sell flexographic products, including the flagship Kodak Flexcel NX systems, 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. Chris Payne, who has served as president of the Flexographic Packaging Division for the last three years, will lead the new company as CEO.

Kodak’s Flexographic Packaging Division is an example of Kodak incubating and bringing disruptive innovation to the marketplace. 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. 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.

Kodak expects to receive total value of up to US$ 390 million (approximately Rs. 2,800 crore), comprised of the following components: (1) base purchase price of US$ 340 million, subject to purchase price adjustments; (2) potential earn-out payments of up to US$ 35 million over the period through 2020 based on achievement by the business of agreed-upon performance metrics; and (3) US$ 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.To know more about debt you can also visit us.The Company 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 Jeff Clarke, CEO, 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.”

Kodak remains committed to the print industry and delivering products and services which meet the evolving needs of printers. Following this transaction, Kodak will continue to focus on the demonstrated growth areas of Sonora environmental plates, enterprise inkjet, workflow software and brand licensing. The company is well-positioned for the future by leveraging these growth engines and continuing to maximize value in commercial printing, film and advanced materials.

The transaction is expected to close in the first half of 2019, subject to the receipt of required regulatory approvals and satisfaction of closing conditions. UBS Investment Bank acted as exclusive financial advisor and Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to Kodak for the transaction. Ernst & Young acted as financial advisor, Bain & Co. acted as commercial advisor and Linklaters LLP acted as legal advisor to Montagu for the transaction. Kodak’s agreement with Montagu, which is available at http://investor.kodak.com/investor-relations, will be filed with the SEC upon the re-opening of the EDGAR system on 13 November 2018.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Indian Printer and Publisher’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

Subscribe Now

LEAVE A REPLY

Please enter your comment!
Please enter your name here