Kodak Selling Health Group for $2.5B
ROCHESTER, N.Y., Jan. 10, 2007 -- Eastman Kodak Co. announced today it is selling its 111-year-old Health Group to Onex Healthcare Holdings Inc., a subsidiary of Canadian investment company Onex Corp., for up to $2.55 billion.
The Health Group makes digital x-ray imaging equipment, medical printers and x-ray film. Its origins can be traced back to the birth of diagnostic imaging technology with the discovery of the x-ray in 1895, according to Kodak's Web site, and produced the first health imaging product in 1896. The unit has remained a part of Kodak under various names, and in 2001 became one of three business groups formed through a company reorganization. The Health Group has been Kodak's second-highest revenue producer, behind only the Photography Group, since 2003, earning $2.7 billion in 2005.
Under terms of the agreement, Kodak will receive $2.35 billion in cash at closing, and could receive up to $200 million in additional payments if Onex Healthcare investors receive a return of more than 25 percent on their investment.
About 8100 employees associated with the Health Group will stay on with the business following the closing, Kodak said. Included in the sale are operations that manufacture health imaging products and an office building in Rochester.
Kodak has been considering selling the Health Group since May 2006, when the company announced a loss of $298 million for the first quarter (See Kodak Loses $298M, May Sell Health Imaging Unit ). Kodak said in a statement today that selling the Health Group will allow it to focus on digital technology for consumer and professional imaging and the graphic communications industry.
Kodak has been building up its Graphic Communications Group over the past two years by taking full ownership of Kodak Polychrome Graphics (previously a joint venture with Sun Chemical), a provider of graphic arts film, conventional lithographic plates and digital color proofing products; and purchasing prepress systems supplier Creo Inc., inkjet technology maker Scitex Digital Printing (renamed Versamark), and NexPress, a producer of digital color and black and white printing equipment.
Because of tax-loss carry forwards, Kodak said it expects to retain the vast majority of the initial $2.35 billion. The company will use some of the money to repay its $1.15 billion in debt and will discuss uses for the rest of the money with its investors at a meeting on Feb. 8.
Toronto-based Onex Corp. is one of Canada’s largest corporations, with global operations in the health care, service, manufacturing and technology industries. The company's health care operations include emergency care facilities and diagnostic imaging clinics.
“Onex is an ideal acquirer of Kodak’s Health Group because they understand the health industry and are committed to growing the business for the benefit of customers and employees,” said Antonio M. Perez, Kodak’s Chairman and CEO. “I’m very pleased that we have such a favorable outcome for all of our constituents.”
“This is a great opportunity to acquire and grow a business that has established an impressive record in delivering innovative solutions to customers around the world,” said Robert M. Le Blanc, an Onex Corp. managing director. “Kodak’s Health Group has an exceptionally strong management team and we share this team’s vision for the future. We recognize that growth is critical and that digital technology is the future, and we believe strongly that customers and employees must continue to be a top priority.”
The sale, subject to regulatory and other approvals, is expected to close in the first half of 2007.
For more information, visit: www.kodak.com
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