Kodak GCG  safety  mergers & acquisitions 
Eastman Kodak Company is to sell its Health Group to Onex Healthcare Holdings, Inc, a subsidiary of Onex Corporation, in a move it says will sharpen Kodak’s strategic focus on consumer and professional imaging and the graphic communications industry. Under terms of the agreement, announced January 10, Kodak will sell its Health Group to Onex for up to US$2.55bn, made up of US$2.35 billion in cash at closing, plus up to US$200m in additional future payments if Onex achieves certain returns with respect to its investment. If Onex Healthcare investors realizs an internal rate of return in excess of 25 per cent on their investment, Kodak will receive payment equal to 25 per cent of the excess return, up to US$200m.

Because of tax-loss carry forwards, Kodak expects to retain the vast majority of the initial US$2.35bn. The company plans to use the proceeds to fully repay its approximately US$1.15bn of secured term debt. Other potential uses of the cash proceeds are under review and will be discussed at Kodak’s previously announced investor meeting, scheduled for February 8.

About 8100 employees associated with the Health Group will continue with the business following the closing. Included in the sale are manufacturing operations focused on the production of health imaging products, as well as an office building in Rochester, New York state.

Kodak’s Health Group, with revenue of US$2.54bn for the latest 12 reported months (through September 30, 2006), is involved worldwide in information technology, molecular imaging systems, medical and dental imaging, including digital x-ray capture, medical printers, and x-ray film.

Onex Corporation, based in Toronto, is a diversified company and is one of Canada’s largest corporations, with annual consolidated revenues of approximately C$20bn and consolidated assets of approximately C$20bn. Onex has global operations in health care, service, manufacturing and technology industries. The health care operations include emergency care facilities and diagnostic imaging clinics.

"Kodak’s Health Group is a business with significant market presence and intellectual property assets," says Antonio M. Perez, Kodak chairman and CEO. "This sale maximizes shareholder value by obtaining a full and fair valuation for this business, and allows Kodak to increase its financial flexibility.

"We now plan to focus our attention on the significant digital growth opportunities within our businesses in consumer and professional imaging and graphic communications," Perez says.

Perez noted that Onex brings significant financial resources to invest in the Health Group business and to ensure its continued success.

Subject to regulatory and other approvals, it is anticipated that the sale will close in the first half of 2007.