Kodak Acquires Creo
January 2005
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ROCHESTER, N.Y.—Eastman Kodak Company (NYSE: EK) today announced that it has entered into a definitive agreement to acquire Creo Inc. (NASDAQ: CREO, TSX: CRE), a premier supplier of prepress systems used by commercial printers worldwide.
Based in Vancouver, Canada, Creo 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 already impressive line-up of digital and traditional printing products and solutions, Kodak's Graphic Communications Group (GCG) reinforces its status as a leading industry participant able to provide customers with all the products and services they need to be successful in a blended production environment, where digital, traditional and hybrid print jobs are converging.
Under the terms of the agreement, Kodak will pay approximately $980 million in cash, or $16.50 per share, for all the outstanding shares of Creo, on a fully diluted basis. Creo presently has approximately $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.
"Graphic Communications represents one of the three pillars of Kodak's digitally oriented growth strategy," said Daniel A. Carp, Kodak's Chairman and Chief Executive Officer. "The purchase of Creo strengthens that pillar, and essentially concludes the company's acquisition plan, announced in September 2003."
"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 $2.60 to $2.90 per share for 2005," Carp said. "We believe we have opportunities to achieve cost and revenue synergies by combining Creo with our existing businesses. We have every intention of building on this acquisition to increase shareholder value."
2006 Commitments Reinforced
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 $700 million of incremental revenue from Creo, whose sales in the 2004 fiscal year totaled $636 million and whose gross margins exceed 40%.
"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," said Antonio M. Perez, Kodak's President and Chief Operating Officer. "As the pioneer of digital prepress systems and the leader in workflow, Creo will accelerate our effort to bring more products to market sooner, for the benefit of our customers and our shareholders. With this move, we are more confident than ever in our ability to meet or exceed our operational earnings guidance of $3.00 per share in 2006."
Based in Vancouver, Canada, Creo 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 already impressive line-up of digital and traditional printing products and solutions, Kodak's Graphic Communications Group (GCG) reinforces its status as a leading industry participant able to provide customers with all the products and services they need to be successful in a blended production environment, where digital, traditional and hybrid print jobs are converging.
Under the terms of the agreement, Kodak will pay approximately $980 million in cash, or $16.50 per share, for all the outstanding shares of Creo, on a fully diluted basis. Creo presently has approximately $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.
"Graphic Communications represents one of the three pillars of Kodak's digitally oriented growth strategy," said Daniel A. Carp, Kodak's Chairman and Chief Executive Officer. "The purchase of Creo strengthens that pillar, and essentially concludes the company's acquisition plan, announced in September 2003."
"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 $2.60 to $2.90 per share for 2005," Carp said. "We believe we have opportunities to achieve cost and revenue synergies by combining Creo with our existing businesses. We have every intention of building on this acquisition to increase shareholder value."
2006 Commitments Reinforced
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 $700 million of incremental revenue from Creo, whose sales in the 2004 fiscal year totaled $636 million and whose gross margins exceed 40%.
"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," said Antonio M. Perez, Kodak's President and Chief Operating Officer. "As the pioneer of digital prepress systems and the leader in workflow, Creo will accelerate our effort to bring more products to market sooner, for the benefit of our customers and our shareholders. With this move, we are more confident than ever in our ability to meet or exceed our operational earnings guidance of $3.00 per share in 2006."
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