Prepress system supplier Creo is to be acquired by Eastman Kodak for a cash price of approximately $980M. The directors of both companies have approved the proposed transaction, subject to shareholder, regulatory and court approvals. A meeting of Creo shareholders to approve the deal is due to be held on March 29.
The proposed transaction follows Kodak's move to become the sole owner of Kodak Polychrome Graphics (see separate story), its joint venture with Sun Chemical.
"The Creo acquisition offers us the opportunity to strengthen our position in the market," says Antonio M Perez, Kodak's president and ceo. "As the pioneer of digital prepress systems and the leader in workflow, Creo will accelerate our effort to bring more products to market sooner, for the benefit of our customers and our shareholders. With this move, we are more confident than ever in our ability to meet or exceed our operational earnings guidance of $3.00 per share in 2006. Creo will benefit from this transaction because Kodak brings them the size and scale necessary to increase their presence in the market. Kodak will benefit because we will be able to offer end-to-end solutions with a broader suite of products from Creo, and to capitalize on the synergies this creates across our Graphic Communications Group."
Kodak will pay approximately $16.50 per share, for all the outstanding Creo shares, on a fully diluted basis. Creo presently has approximately $85M of cash on its balance sheet and no debt. For 2006, Kodak expects Creo will add at least 5 cents to per-share operational earnings, driven by cost savings and revenue growth available to the combined entity. In 2006, it also expects approximately $700M of incremental revenue from Creo.
Based in Vancouver, Canada, Creo is said to be the world's leading provider of workflow software used by printers, with sales of $636M last year. CEO Amos Michelson states: "The economy of scale gained by combining resources will allow us to speed up product development and deliver new innovations and breakthrough solutions to the market. Kodak also stands to gain a great deal, including a pipeline of promising products from Creo's leading research and development organization, direct access to the largest installed base of computer-to-plate and workflow systems in the world, and access to our extremely loyal and supportive customer base."
Kodak had sales of $13.5 billion in 2004. Its Graphic Communications Group offers on-demand colour and black and white printing, inkjet printing, and document scanning, output and storage products and services.
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