According to a press release, Creo, based in Vancouver, Canada, is the world’s No. 1 provider of workflow software used by printers to manage efficiently the movement of text, graphics and images from the computer screen to the printing press. By adding Creo to its line-up of digital and traditional printing products and solutions, Kodak’s Graphic Communications Group (GCG) wants to reinforce its status as a leading industry participant able to provide customers with all the products and services for a changing production environment, where digital, traditional and hybrid print jobs are converging.
Under the terms of the agreement, Kodak will pay approximately US-$ 980 million in cash or US-$ 16.50 per share, for all the outstanding shares of Creo, on a full diluted basis. Creo presently has approximately US-$ 85 million of cash on its balance sheet and no debt. The transaction, which has been approved by Kodak’s and Creo’s respective Boards of Directors, is to be carried out by statutory plan of arrangement under Canadian law and is subject to regulatory approvals, the approval of Creo’s shareholders and court approval.
“While this acquisition will result in some modest earnings dilution for the remainder of 2005, we remain committed to our operational earnings guidance range of US-$ 2.60 to US-$ 2.90 per share for 2005,” Daniel A. Carp, Kodak’s Chairman and Chief Executive Officer, said. “We believe we have opportunities to achieve cost and revenue synergies by combining Creo with our existing businesses.”
For 2006, Kodak expects that Creo will add at least 5 cents to per-share operational earnings, driven by cost savings and revenue growth available to the combined entity. In 2006, Kodak also expects approximately US-$ 700 million of incremental revenue from Creo, whose sales in the 2004 fiscal year totaled US-$ 636 million and whose gross margins exceed 40 percent. The company has more than 25,000 customers and offices in 30 countries worldwide.
The proposed transaction followed an announcement on January 12 that Kodak has entered into an agreement to become the sole owner of Kodak Polychrome Graphics (KPG), its joint venture with Sun Chemical Corporation. KPG is a leading supplier of digital and conventional lithographic plates, digital color proofing products and graphic arts films, with strong worldwide distribution.