After closing, the business will operate as a new standalone company which will develop, manufacture and sell flexographic products, including the flagship Kodak Flexcel System to the packaging print segment.
“This transaction is an important turning point in our transformation and is a significant, positive development for Kodak,” said Jeff Clarke, CEO, Kodak.
He added, “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 expects to receive total value of up to USD 390 million, comprised of the base purchase price of USD 340 million, which is subject to purchase price adjustments; potential earn-out payments of up to USD 35 million over the period through 2020 based on achievement by the business of agreed-upon performance metrics; and USD 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.
Under its new ownership, the business will have the same organisational structure and management team. Chris Payne, who has served as president of the flexographic packaging division for the last three years will lead the new company as CEO.
Following this transaction, Kodak will continue to focus on Sonora plates, enterprise inkjet, workflow software and brand licensing.
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 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.