The deal will make Kodak one of the top three suppliers in the sector, along with Hewlett-Packard and Epson-based machines.
Kodak expects the buy to contribute to its earnings from 2003.
Encad president and chief executive Terry Vandewarker said Kodak had the resources, complementary skills and market presence Encad needed to accelerate its growth.
Kodak expects the deal to be completed by early 2002. The acquisition builds on its launch of the Kodak Professional 5260 piezo ink-jet printer.
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