SHUTTERFLY ROSE as much as 18 per cent in early New York trading yesterday after announcing an initial bid to buy Eastman Kodak’s online-picture business for $23.8 million.
The sale kicks off the bankrupt photography pioneer’s relaunch as a much slimmer company, although a patent sale seen crucial to its turnaround may still be months away.
The once-iconic company that invented the hand-held camera has said it will quit the camera business. It is expected to fetch $1 billion to $2 billion from the sale of about 1,100 digital patents, which is due to get under way by June 30th.
A source familiar with the patent sale said the process was moving forward, but the completion was not expected any time soon. Complicating the prospects is a dispute with computer giant Apple over one of the patents.
At a hearing next week, a bankruptcy judge will hear Apple’s motion to move forward with its patent-infringement suit.
Apple has asked the bankruptcy court to lift the automatic stay applied to pending litigation against Kodak when the company filed for Chapter 11 on January 19th.
Kodak said the deal with Shutterfly followed a “stalking horse” bid – a starting bid or minimally accepted offer that other bidders must surpass in a court-supervised auction – from the web-based personal publishing service.
Shutterfly shares rose 18 per cent to $31.70 in extended trade, following the news. The stock had closed at $26.91 on Thursday on the Nasdaq.
Kodak Gallery – which enables users to store and share their own images and create custom-printed photobooks, cards and albums – has more than 75 million users.
Kodak is focusing its consumer business on retail and destination photo solutions as well as home printing products, Pradeep Jotwani, president of consumer businesses and chief marketing officer of Kodak, said in a statement.
Shutterfly,with millions of customers, bought privately held card design company Tiny Prints in a $333 million cash-and-stock deal last year.
It competes primarily with services such as Hewlett Packard’s Snapfish, Kodak’s EasyShare Gallery and American Greetings’ Photoworks and Webshots brands. – (Reuters/Bloomberg)
