Eastman Kodak has announced a buyer for its Flexographic Packaging division.
The company had announced last summer it was looking to sell that division and on Monday announced it will be sold to a London-based private equity firm, Montagu Private Equity. Kodak expects to gain up to $390 million from the sale, and it will use the proceeds to pay down outstanding debt.
Under the new ownership, that divison will keep the same management with Chris Payne, who has been president of the division, named as the CEO of the new company.
Kodak says the Flexographic division has a total of 317 employees. Twenty-seven of those employees work here in Rochester.
Clyde Hull, who teaches management and business strategy at the Rochester Institute of Technology, said it's likely a good sign for the Rochester area that the business Kodak is spinning off is one with only 27 employees locally. "It looks like the company is going to have a chance to focus on its growth here, at least in the short term," he said.
Kodak officials say the Flexographic Packaging business has thrived over the last five years, but the company said previously that by selling the division it could concentrate on growth areas.
There are two ways to look at selling the division, said Hull. "On the one hand, you might think, well, this is making money; they should keep it," he said. "On the other hand, they're getting a lot of money for it, and that's letting them settle some debt and maybe put some money into something else they want to focus on."
In a statement released Monday, Kodak CEO Jeff Clarke said, “This transaction is an important turning point in our transformation and is a significant, positive development for 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 says it 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 what it calls, “the demonstrated growth areas of SONORA environmental plates, enterprise inkjet, workflow software and brand licensing.”
Kodak’s press release also says that the company is well-positioned for the future by leveraging these growth engines and continuing to maximize value in commercial printing, film and advanced material.
Kodak stock rose sharply on the news Monday; it closed up $0.57 to $3.66 a share, a nearly 18.5 percent increase.