Kodak Develops Taste For Heidelberg Digital Deal

Heidelberg is handing over its digital division to Eastman Kodak.

Heidelberg is handing over its digital division to Eastman Kodak.

The two companies have signed a mutual agreement, which yet is to be confirmed by the anti-trust organisations.

The agreement involves all Heidelberg digital print activities, including the digital b/w business (HDI) in the USA), its 50% share in the Heidelberg-Kodak joint venture Nexpress Solutions LLC also in the USA, and its 100% share of Nexpress GmbH in Kiel, Germany.

In 2002-2003, Heidelberg's digital division achieved 240 million Euros in sales.

This accounted for roughly 6% of Heidelberg's total sales (4.1 billion Euros).

Under the terms of the acquisition, the companies have agreed to use a performance-based earn-out formula whereby Kodak will make periodic payments to Heidelberg over a two-year period, if certain sales goals are met.

If all sales targets are met during the next two calendar years ending December 31, 2005, Kodak will pay a maximum of US$150 million in cash.

Additional sales-related earn-out payments over a five-year period have also been agreed, if other sales targets are achieved.

Kodak will not pay any cash at closing for the business being acquired.

Further financial details of the transaction were not disclosed.

Integration of digital printing in printshops' workflows, using Prinect, will remain part of the Heidelberg service offerings and will be intensified.

Eastman Kodak will absorb the Heidelberg location at Rochester (USA).

About 2,000 people worldwide are involved in Heidelberg's digital research, development, production, sales and service.

"From now on, Heidelberg will strengthen its focus on the sheetfed offset business in order to optimally serve commercial, packaging and label printers with a comprehensive product portfolio.

We are convinced that this strategy will lead Heidelberg back to profitability very quickly," said Heidelberg chief executive officer Bernhard Schreier.

"This is Heidelberg's reaction to the changes in market dynamics within the print media industry.

We will reallocate our resources and refocus our efforts on our core customer base in the offset sector," he added.

As part of Heidelberg's new alignment, announced in November 2003, the company will intensify its focus on the sheetfed offset, pre-press and finishing businesses, as well as their attached workflow systems, training and service activities.

Heidelberg and Eastman Kodak created the Nexpress Solutions LLC joint venture in 1997 to develop a digital color printing press for the high-end market.

The company also acquired Kodak's office imaging black and white digital printing activities in 1999.

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