Purchase Of Kodak Document Imaging Set To Position Brother In Scanning And B2B Markets

By John Oncea, editor, ECM Connection

Offering of $210 million and assumption of $67 million of deferred service revenue liability could be accepted by end of April, finalized by June

Kodak announced it has entered into an agreement with Brother Industries, Ltd., for the proposed sale of certain assets of its Document Imaging business for a cash purchase price of approximately $210 million, subject to certain price adjustments at closing. Brother will assume deferred service revenue liability of the business, which totaled approximately $67 million as of December 31, 2012.

Under the terms of the agreement, Kodak will seek U.S. Bankruptcy Court approval of the bidding procedures at a hearing in late April and is targeting final court approval of a transaction in June. The release quotes Antonio M. Perez, Chairman and Chief Executive Officer of Kodak, as saying, “This proposed sale is another key step in Kodak’s path to emergence – it moves us closer to realizing our strategic vision for Kodak’s future.”

Brother released its own statement which read, in part, “The company expects to complete the acquisition in the third quarter of 2013.” The release quotes Toshikazu Koike, Representative Director and President of Brother Industries, Ltd., as saying, “We believe that Kodak Document Imaging is an asset that will help to strengthen Brother’s global position in document imaging solutions and enable us to provide an enhanced product and service offering to an expanded universe of customers.”

ZDNet presumes, “Kodak's portfolio will be integrated with Brother's laser, label, and multi-function printers” and also notes, “There wasn't much information about what would happen to the employees in this particular department at Kodak.” However, Kodak’s Perez hinted that at least some employees might be kept on by Brother, saying the sale “represent(s) an excellent outcome for Document Imaging’s customers, partners, and employees" if it goes through.

The Rochester Democrat And Chronicle noted Brother International President Tadashii Ishiguro declined to say what Brother’s plans are for the Kodak brand or for Kodak personnel and facilities dedicated now to the document imaging business, saying the company would have more to say after the acquisition is completed.

This is the third major sale conducted by Kodak in the past year as it attempts to exit bankruptcy protection. Last December, the Rochester, New York-based company sold more than 1,000 patents related to the capture, manipulation, and sharing of digital images to Apple and Google for $527 million. Kodak noted at that time the patent sale would enable “the company to continue innovating in its core Commercial Imaging technologies that are fundamental to its future.”

In March, 2012 Kodak sold its online picture service to Shutterfly for $23.8 million – a deal which was completed in July, 2012. Pradeep Jotwani, President, Consumer Businesses and Chief Marketing Officer for Kodak noted at the time of the sale Kodak was “focusing its consumer business on retail and destination photo solutions as well as home printing products.”

Bloomberg reported last month Shutterfly is suing Kodak, accusing it of violating a noncompetition agreement included in the sale of the online picture service. Specifically, Shutterfly said in a complaint filed in U.S. Bankruptcy Court in Manhattan, “A Kodak service called My Kodak Moments, which allows users to create photo books and order prints from their smartphones, is “explicitly prohibited” under the agreement.” Bloomberg adds the photography pioneer’s three recent sales won’t be the last as Kodak is “looking for buyers for its consumer-film and photo-kiosks divisions.”

The Phoblographer has constructed a timeline looking back at “what’s been happening in Kodak’s current whirlwind.”