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see gain in sale

Both Kodak, Heidelberg
see gain in sale

The sale of Eastman Kodak Co.’s copier unit to German offset printing firm Heidelberger Drucksmaschinen AG will give each of the companies something it appears to want.
Kodak finally gets rid of the poorly performing imaging unit, for which it could not find a buyer when it sold the sales and service segments to Danka Business Systems PLC in 1996. Heidelberg acquires a fallback position, in case its offset-printing section starts to lose market share to digital-oriented companies.
“This has been an operation that has been a sore spot (for Kodak) for quite a number of years,” said Ulysses Yannas, an analyst with Mercer, Bokert, Buckman & Reid Inc. in New York City. “It takes (the copier division) off Kodak’s books, puts some money in the till, eliminates sales–some good, some bad.”
Meanwhile, Heidelberg–keeping an eye on the rise of digital printing and the competition it presents for offset printing–“decided to hedge its bets,” the analyst said.
Yannas, in last week’s Rochester Business Journal, had suggested that Kodak might merge the rest of the copier division into NexPress Solutions LLC. Kodak and Heidelberg launched the joint venture in 1997; it is headquartered here, with a wholly owned subsidiary in Kiel, Germany, and a facility in Stuttgart. NexPress is devoted to creating the next generation of digital color printing for customized and personalized uses.
Instead, Kodak said on Wednesday that it would sell its digital printer, copier and roller assembly operations to Heidelberg.
The financial details of the sale were not disclosed, but analysts told the Wall Street Journal that it was valued at roughly $200 million.
At the same time, NexPress will expand to include the black-and-white electrophotographic business. Kodak will contribute research and development resources to NexPress, as well as toner and developer operations in Rochester and Kirkby, England. At least 1,500 jobs will be transferred from Kodak to Heidelberg and NexPress, but operations will remain in their current locations, the companies said.
NexPress intends to tap into a market for custom printing that could run off jobs as small as a single copy. The market is predicted to expand to $20 billion next year and from there grow 20 percent to 30 percent annually.
Heidelberg will produce copier-duplicators, printer engines and other parts for NexPress, and the companies expected that NexPress would supply products to Danka Business Systems PLC, among other channels.
Danka acquired the sales and service section of Kodak Office Imaging in 1996 while Kodak continued to evaluate how to deal with the rest of the division. Danka, with headquarters in London and St. Petersburg, Fla., is an independent supplier of office equipment and related services.
Danka has renewed agreements with Kodak to receive parts and supplies, and NexPress is expected to take over that role. The last extension was Feb. 28. Kodak eliminated hundreds of positions last fall because of poor Danka sales, and Danka itself in January dropped some 450 jobs at Rochester facilities.
By the close of trading on Wednesday, Kodak’s stock (NYSE: EK) had risen a modest 44 cents to $68.13, on below-average volume. Danka’s stock (NASDAQ: DANKY) rose almost 13 percent, to close at $5.75, on above-average volume.
“(The deal) enables Kodak to leverage our core competencies in materials for use in electrophotographic products, while building on Heidelberg’s leadership in equipment manufacturing and digital printing,” said Patrick Siewert, president of Kodak Professional.

3/19/99

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