Say hello to the tip of the iceberg. Eastman Kodak Co. yesterday announced the proposed sale of its KODAK Gallery photo services website to online personal photo publishing service Shutterfly Inc. for $23.8 million. The sale is one of the first steps along Kodak’s arduous path to climbing out of bankruptcy, for which it filed in mid-January.
Kodak announced that the deal followed a “stalking horse bid,” which is intended to maximize the value of the asset, as part of a court-supervised process under Section 363 of the U.S. Bankruptcy Code.
“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,” Pradeep Jotwani, president, consumer businesses and chief marketing officer, said in a statement.
The agreement’s terms include the transfer of KODAK Gallery customer accounts and images in the U.S. and Canada to Shutterfly. The Gallery enables its 75 million users to store and share images, as well as create custom albums, cards and photobooks. Shutterfly said that it will allow users to opt out of the transition.
Under the terms of the agreement, Kodak will seek the U.S. Bankruptcy Court’s approval by the end of the month, at which time other potential buyers may submit alternative bids. Kodak expects the sale process to close this spring.
Despite the potential sale, many hurdles remain for the Rochester, N.Y.-based company as it seeks to sell off its vast patent portfolio, which is reported to fetch between $1 billion to $2 billion.
The most pressing impediment at the moment is a possible lawsuit from Apple Inc., which has asked a bankruptcy judge to allow it to sue Kodak for allegedly infringing patents for printers, cameras and digital picture frames. The judge will hear Apple’s motion to move forward with the lawsuit on March 8.
For more, read Reuters.