Kodak: Prosper sale is off


Kodak has reversed its decision to sell off its Prosper and Ultrastream inkjet operations and will now retain them, after the offers received “did not reflect the value of the business”.

The group announced its plans to sell off its graphic arts inkjet operations, except the legacy Versamark business, just over a year ago.

It had initially hoped to conclude the sale by the end of 2016, but talks dragged on. At the firm’s Q4 and 2016 results announcement last month, chief executive Jeff Clarke had stated that negotiations with multiple global parties were still ongoing.

That has now all changed. Philip Cullimore, president of Kodak’s Enterprise Inkjet and Micro 3D Printing & Packaging divisions, told PrintWeek that the improvement in Prosper’s performance, combined with a positive reaction to its new Ultrastream technology had contributed to the about-turn.

“The world moves on and times change and you reach a different decision. I’m very happy for the team that the company has reflected on the value that the Prosper and Ultrastream business is bringing,” he said.

Kodak chief financial officer David Bullwinkle said the group had received multiple offers, but “the range of consideration did not reflect the value of the business today”.

Xerox had been hotly-tipped as the most likely buyer. 

“We have made amazing progress in the last 18 months or so – Prosper annuities are up 40% and that drives profitability. The other thing is how quickly so many OEMs have signed up to take a look at Ultrastream,” Cullimore stated.

“The Ultrastream interest has solved some of the problems [we had], and we believe the asset has increased in value. This is Kodak being strategically agile and I hope that’s how people take it.”

Alongside the announcement that it would retain the Prosper and Ultrastream technology, Kodak also announced it has signed multiple letters of intent with potential OEM partners, and is to begin delivering evaluation kits to 17 of them. It named Goss China, Matti Technology, MHI-PPM (Mitsubishi Heavy Industries Printing & Packaging Machinery), Uteco and Fuji Kikai as initial OEM partners.

“We originally had a view that someone bigger should take it on, but OEMs change all that, because we get to leverage someone else’s transport system,” Cullimore said.

Kodak has also announced that Cullimore will leave the business at the end of this month to take a sabbatical, after a decade at the manufacturer. He will be replaced as president of Enterprise Inkjet Systems by Randy Vandagriff, who is currently vice president of R&D for commercial inkjet.

“This is the right time to step back, and I know Randy will take the business to the next level,” Cullimore said. “This a real technology company in terms of developing systems, and he is the perfect guy to run it.”

The decision to retain the Prosper business appears likely to involve some substantial exceptional costs for Kodak. It had been treating the operation as discontinued in its financial reports, and had brought in specialists from Sagent Advisors to advise on the drawn-out sale. It will now reclassify Prosper as part of its Enterprise Inkjet Systems Division, and will provide a further update with its Q1 results.  

Prosper lost $28m (£22.6m) last year but the operation’s performance improved markedly in the fourth quarter. “Excluding the Ultrastream investment, Prosper is profitable. We’re going to double down on that and get Ultrastream to market.” Cullimore stated.  

Vandagriff said interest in Ultrastream was “pretty broad in terms of applications”, including labels and flexible films and both roll-fed and sheetfed at 1m wide. Wide-format applications are also on the cards. He will retain his R&D remit on an interim basis to oversee the Ultrastream OEM roll-out.

Ultrastream products are expected to reach the market in 2019.

Kodak's share price fell by 5.6% to $10.95 after the announcement. The 52-week low is $10.30. 

 

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