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Technology Stocks : Eastman Kodak Company (NYSE: KODK) -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (221)	2/1/2005 10:26:05 AM
From: richardred	Read Replies (1) \| Respond to of 484

Kodak to pay $980M for Creo Tuesday February 1, 5:00 am ET By David Shabelman Seeking to avoid a proxy contest it remains in danger of losing, Canadian printing systems maker Creo Inc. on Monday, Jan. 31, agreed to a buyout by Eastman Kodak Co. for $980 million. The Rochester, N.Y.-based imaging giant will pay $16.50 a share in cash for Creo, a 15% premium over the target's closing share price Friday of $14.36. Creo, a Vancouver, British Columbia-based maker of digital printing plates for the graphic arts industry, has been struggling amid a loss in market share in its core business selling "computer-to-plate" software. The company, whose stock was stagnant in 2004, has recently missed profit targets and failed to cut costs, its critics contend. Indeed, it is unclear whether the deal with Kodak will appease a dissident shareholder group that announced in October that it would seek to out CEO Amos Michelson and replace several Creo directors. Leading the governance fight is Burton Capital Management LLC, a Greenwich, Conn.-based hedge fund, and Canadian asset management firm Goodwood Inc. The investors, which together hold about 6% of Creo's shares, have proposed appointing Burton Capital's Robert Burton to replace Michelson. Burton Capital did not return calls seeking comment, though the company was expected to issue a statement late Monday. Creo said it is changing the date of its annual meeting from Feb. 10 to March 29. Peter Puccetti, chairman and chief investment officer with Goodwood, declined to say whether the dissidents would back Kodak's offer. He did, however, suggest that the bid may undervalue Creo. "It certainly doesn't look like Kodak's overpaying for it," he said. Groundwork for the deal was laid on Jan. 12, when Kodak announced it would acquire the 50% stake in Kodak Polychrome Graphics it did not already own from Sun Chemical Corp. for $817 million cash. The move spurred speculation that Kodak wanted to acquire Creo through KPG, a digital arts firm, but Sun Chemical did not want to invest additional capital into the venture. Kodak has attempted to expand its digital technology offerings since 2003. Jeff Rath, an analyst with Canaccord Capital Corp. in Toronto, said the deal with Kodak would benefit Creo strategically, but he questioned whether the price was too low. The prospects of a messy proxy fight may have induced Creo's leadership to accept a lower premium, he said. "It was going to be a challenge for the existing management to win that vote, so that leads to the question of whether Kodak got a better price because of what Creo was up against," he said. One source close to the deal argued that Kodak was under pressure to complete the deal before the proxy vote. That's because a change in management at the company could have delayed or otherwise complicated a deal. "If Kodak wanted to do a deal, now was the time," he said. "And maybe they weren't going to be able to do it if the dissidents were in place." Creo executives declined to provide any financial details of the agreement or disclose whether the company had received other offers. "Merrill Lynch [& Co.] left no stone unturned," said Ken Spencer, head of the special committee of Creo's board of directors, alluding to the company's financial adviser. "They talked to a large number of people, and then we went through the process of who was interested." In a conference call, Kodak indicated that buying Creo would be the final in a string of acquisitions the company made beginning in 2004 to bolster its digital technology offerings and to diversify its business. The company acquired Scitex Digital Printing for $250 million in January 2004; NexPress Solutions LLC a digital production firm, for up to $150 million; and the remainder of KPG — Laura King in Toronto contributed to this report biz.yahoo.com