Remember that Kodak Photo Gallery online picture service that we didn't use? It appears that years of shipping packed-in with the company's cameras have netted it some 75 million users, making it an asset that now-bankrupt Kodak has agreed to sell off to Shutterfly for $23.8 million. The deal isn't quite done yet, with Shutterfly's offer entered as a stalking horse bid while other buyers may also submit proposals before the process is targeted to close in the spring. This is all a part of Kodak's pivot away from digital cameras and related products as it focuses on enterprise services and desktop printers instead. Under the current agreement, current gallery customers uncomfortable with being shipped off to Shutterfly will be able to opt out and either download their stored pics or buy them on DVDs. Otherwise, their accounts will be transferred in a way that is "preserved, and protected" -- that is to say, almost entirely unlike the way they're handled on iOS and Android.
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Kodak Enters into Agreement for Proposed Sale of Gallery Photo Services Site to Shutterfly
Shutterfly to provide stalking horse bid in court-supervised auction process
ROCHESTER, N.Y., March 01 --
Eastman Kodak Company has announced that it has entered into an agreement with Shutterfly, a leading Internet-based social expression and personal publishing service, for the proposed sale of certain assets of its KODAK Gallery on-line photo services business for $23.8 million. The terms of the agreement include the transfer of Gallery customer accounts and images in the U.S. and Canada to Shutterfly. The agreement comprises the initial, stalking horse bid in a Court-supervised auction process under Section 363 of the U.S. Bankruptcy Code that will ensure the maximization of value for the assets.
"This sale is consistent with our objective of focusing Kodak on a core set of businesses in which we can most profitably leverage our technology and brand strengths, and provides a well-proven mechanism for ensuring that Kodak receives maximum value from these assets," said Pradeep Jotwani, President, Consumer Businesses and Chief Marketing Officer. "KODAK Gallery is a unique property, with more than 75 million users, and an ability to attract new members through innovative customer offerings such as its category-leading popular mobile apps."
Jotwani emphasized that under the agreement, Kodak will work closely with Shutterfly to ensure a smooth transition and that customer photos will continue to be safeguarded throughout the process.
"We appreciate the loyalty of the KODAK Gallery customers in the U.S. and Canada who have entrusted us with their photo memories. We know how much they value their photos, so we will ensure that a transition is smooth and easy for them, and that their images will be preserved and protected," Jotwani said. "We are pleased that under this stalking horse agreement with Shutterfly, our customers will continue to enjoy a rewarding on-line photo experience."
Kodak will give customers who do not want their photos transferred to Shutterfly the opportunity to opt out of the transition process. Those customers could then retrieve their images through free downloads or by purchasing DVDs from KODAK Gallery.
Jotwani noted that Kodak is focusing its consumer business on retail and destination photo solutions as well as home printing products. "Those businesses have attractive and growing sales of consumables," he said. "We are by far the leader in retail print solutions, with an installed base that has grown now to 105,000 picture kiosks, while our consumer inkjet printers offer high-quality, affordable ink."
Under the terms of the Agreement, Kodak will seek U.S. Bankruptcy Court approval of sale and auction procedures by late March. Under these proposed procedures, other potential buyers may submit alternative bids to Kodak and seek to establish the superiority of their alternative bid. Kodak is targeting completion of the sale process this spring.
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This document includes "forward–looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Forward–looking statements include statements concerning the Company's plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, financing needs, plans or business trends, and other information that is not historical information. When used in this document, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," or future or conditional verbs, such as "will," "should," "could," or "may," and variations of such words or similar expressions are intended to identify forward–looking statements. All forward–looking statements, including, without limitation, management's examination of historical operating trends and data are based upon the Company's expectations and various assumptions. Future events or results may differ from those anticipated or expressed in these forward-looking statements. Important factors that could cause actual events or results to differ materially from these forward-looking statements include, among others, the risks and uncertainties as described in more detail in the Company's most recent annual report on Form 10–K for the year end December 31, 2011, under the headings "Business" (Item 1 of Part 1), "Risk Factors" (Item 1A of Part 1), "Management's Discussion and Analysis of Financial Conditions and Results of Operations Liquidity and Capital Resources" (Item 7 of Part 2), "Notes to Financial Statements", and "Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Litigation Reform Act of 1995", and those described in filings made by the Company with the U.S. Bankruptcy Court for the Southern District of New York and in other filings the Company makes with the SEC from time to time. There may be other factors that may cause the Company's actual results to differ materially from the forward–looking statements. All forward–looking statements attributable to the Company or persons acting on its behalf apply only as of the date of this document, and are expressly qualified in their entirety by the cautionary statements included in this document. The Company undertakes no obligation to update or revise forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.