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Kodak Agrees to Acquire Creo, and Becomes Sole KPG Owner

(February 2005) posted on Thu Feb 10, 2005

"Creo will accelerate our effort to bring more products to market sooner."


By Gregory Sharpless

Late in 2003, as Kodak acquired Scitex Digital Printing, Kodak chairman and CEO Daniel Carp said, "This is the first of several actions Kodak will take to expand our participation in the digital commercial printing industry. We are moving decisively to implement our growth strategy by expanding into a range of commercial digital businesses. One part of that strategy is to acquire companies and technologies"?."
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That was no idle forecast. After taking over Scitex Digital Printing and renaming it Kodak Versamark, Kodak then announced in March 2004 that it would acquire Heidelberg's 50% interest in NexPress Solutions. In addition, it moved to acquire the equity of Heidelberg Digital, as well as NexPress GmbH, Heidelberg's German subsidiary. The acquisitions were completed in May of that year, which is when Kodak also formed its Graphic Communications Group (GCG), comprising Encad, NexPress Solutions, and Kodak Versamark, as well as Kodak's interest in Kodak Polychrome Graphics (KPG).
@Text:Now, Eastman Kodak has delivered on the other "actions" in its strategy. In the weeks just before this issue went to press, the company became the sole owner of KPG, then reached an agreement to buy Creo.

Taking all of KPG

In mid-January of 2005, Eastman Kodak announced that it will become the sole owner of KPG by purchasing Sun Chemical's 50% interest in the company. KPG will become a wholly owned subsidiary and part of Kodak's GCG.

Established in 1998 as a joint venture between Kodak and Sun, KPG is based in Norwalk, CT. It provides monitor and remote-proofing solutions, computer-to-plate products, digital color proofing products, graphic-arts film, and more. KPG has operations on six continents and 4,000 employees worldwide.

"This transaction is a major step toward delivering on our intent of presenting one face to the customer," says James Langley, president of Kodak's GCG. "KPG's innovative products, established customer relationships, and world-class sales and service organization will dramatically increase our solutions portfolio and global distribution capabilities." The transaction is expected to close in April 2005.

Acquiring Creo

Then, on the heels of the KPG deal, Kodak announced that it had entered into an agreement to acquire Creo, the Vancouver, Canada-based provider of workflow software and other technologies. Creo has more than 25,000 customers and offices in 30 countries worldwide.

"While we are very pleased with the assets that currently comprise our Graphic Communications Group, the Creo acquisition offers us the opportunity to strengthen our position in the market," says Antonio M. Perez, Kodak's president and COO. "As the pioneer of digital prepress systems and the leader in workflow, Creo will accelerate our effort to bring more products to market sooner"?."
@Text:"Creo's product line complements the work already underway at Kodak," says Langley. "Commercial printers use Creo's products in tandem with those sold by KPG; combining Kodak's, KPG's and Creo's portfolios will give customers what they want--a single supplier for their graphic communications needs. We will be able to marry our digital presses with Creo's prepress offerings"?to accelerate growth."
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Upon the closing of the transaction and the completion of the organizational structure of Kodak's GCG, Creo's operations will become part of the Graphics Solutions & Services operating unit of GCG, reports Kodak.

"By uniting our strengths, Creo and Kodak can continue to actively drive the evolution of the graphic communications industry while delivering a complete line of the highest-quality, most competitive products and services in our industry," says Amos Michelson, Creo CEO. "The economy of scale gained by combining resources will allow us to speed up product development and deliver new innovations and breakthrough solutions to the market."
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The boards of directors of Kodak and Creo have approved the proposed transaction, which must also meet shareholder approval as well as regulatory and court approvals.

Strengthening the pillar

Following the Creo announcement, Kodak's Daniel Carp said that "Graphic communications represents one of the three pillars of Kodak's digitally oriented growth strategy--the purchase of Creo strengthens that pillar, and essentially concludes the company's acquisition plan"?." With Creo and a wholly owned KPG added to its roster of Encad, NexPress Solutions, and Kodak Versamark, Kodak has ensured that this particular pillar will strongly serve the market for some time.
(Kodak: www.kodak.com, KPG: www.kpgraphics.com, Creo: www.creo.com)


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