Brother Puts Up Stalking Horse Bid for Kodak DI

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Brother Industries has posted the initial “stalking horse” bid in the auction for Kodak Document Imaging. The way I understand it is that the $210 million offer will serve as the minimum bid in an auction that will take place throughout May and close in June. According to the press release on the bid, “Kodak will seek U.S. Bankruptcy Court approval of the bidding procedures at a hearing in late April and is targeting final court approval of a transaction in June.”

When Kodak announced it was selling Document Imaging last August, it was advertised as a $400 million profitable business coming off a record year. There is not doubt that the uncertainty surrounding Kodak corporate’s bankruptcy has negatively impacted Kodak DI’s sales, but $210 million still seems like somewhat of a bargain. That said, the deal also includes  Brothers’ accepting $67 million in owed service contracts – presumably stuff that can continued to be renewed, so it shouldn’t have negative impact on the bottom line.

Brother would be classified as a strategic buyer as it was recently moved into the document scanner market with the release of some mobile and desktop workgroup models.When I last talked with Brother executives, they said they indicated the vendor had plans to keep moving upstream and an acquisition of Kodak would certainly be one way to do that.

Rumor has it that several venture capital/investment firms were also looking at Kodak, so perhaps there will be a higher bid between now and June. But, remember the prediction I made back in January, “Kodak DI will be acquired by a major printer vendor.” The ball is in play.

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