Eastman Kodak Co. is selling its health-imaging business, createdafter the discovery of X-rays in 1895, to Canadian investment firmOnex Corp. for up to $2.55 billion as the picture-taking pioneerbets its future on digital photography and commercial printing.
Kodak said Wednesday it plans to pay down about $1.15 billion indebt and funnel the rest of the proceeds into unspecified digitalventures as profits from its storied film business rapidly erode.
"Getting rid of the health-imaging unit is a positive -- they'vegot another $1 billion that they can play with," said analystShannon Cross of Cross Research in Short Hills, N.J. However, "theystill face the same challenges, and a huge chunk of their earningswas coming from health imaging."
Onex Healthcare Holdings Inc., a subsidiary of Canada's largestbuyout firm, will pay $2.35 billion in cash and up to $200 millionmore if its investors realize an internal rate of return of morethan 25 percent. The deal is expected to close in the first half ofthis year.
Toronto-based Onex Corp., which boasts annual revenues of about20 billion Canadian dollars ($17 billion), teamed up on recenttakeovers of Australia's Qantas Airways Ltd. and Raytheon's aircraftbusiness.
Kodak founder George Eastman expanded photography's parameters toX-ray film in 1896 within months of German physicist WilhelmRoentgen's discovery that X-rays would expose photographic plates.
The health group, which makes X-ray film, medical printers andinformation management software and storage systems and employs8,100 people, accounted for nearly one-fifth of Kodak's $14.3billion in sales in 2005. But the unit's operating profit plunged21 percent that year as margins tightened.
With manufacturing operations in Rochester, Windsor, Colo.,Oakdale, Minn., and White City, Ore., as well as Xiamen, China,Guadalajara, Mexico, and Berlin, it competes against such companiesas General Electric Co., Germany's Siemens AG, Royal PhilipsElectronics NV of the Netherlands and Belgium's Agfa-Gevaert.
Kodak hired Goldman Sachs & Co. last May to help explorealternatives for the division. Analysts had expected it to be eithersold outright for anywhere from $2 billion to $4 billion, dismantledand sold in pieces, or turned into a joint venture.
Aside from reducing debt, Kodak said other potential uses for thecash proceeds are under review and will be discussed at its annualmeeting with investors Feb. 8 in New York City.
Kodak shares fell 35 cents, or 1.37 percent, to close at $25.28on the New York Stock Exchange. They have traded in a 52-week rangeof $18.93 to $30.91.
As Kodak enters the final year in its historic, four-year digitalmakeover, it has piled up $2.6 billion in restructuring charges,accumulated $2 billion in net losses over the last eight quartersand axed 27,000 jobs. Even before shedding its health unit, its workforce had dipped below 50,000 from a peak of 145,300 in 1988.
In the July-to-September quarter, Kodak's losses narrowed to $37million as digital profits surged above $100 million. It postsfourth-quarter earnings on Jan. 31.
Kodak selling health-imaging division ; Canada's Onex Healthcare Holdings is paying up to $2.55 billion for the unit
Eastman Kodak Co. is selling its health-imaging business, createdafter the discovery of X-rays in 1895, to Canadian investment firmOnex Corp. for up to $2.55 billion as the picture-taking pioneerbets its future on digital photography and commercial printing.
Kodak said Wednesday it plans to pay down about $1.15 billion indebt and funnel the rest of the proceeds into unspecified digitalventures as profits from its storied film business rapidly erode.
"Getting rid of the health-imaging unit is a positive -- they'vegot another $1 billion that they can play with," said analystShannon Cross of Cross Research in Short Hills, N.J. However, "theystill face the same challenges, and a huge chunk of their earningswas coming from health imaging."
Onex Healthcare Holdings Inc., a subsidiary of Canada's largestbuyout firm, will pay $2.35 billion in cash and up to $200 millionmore if its investors realize an internal rate of return of morethan 25 percent. The deal is expected to close in the first half ofthis year.
Toronto-based Onex Corp., which boasts annual revenues of about20 billion Canadian dollars ($17 billion), teamed up on recenttakeovers of Australia's Qantas Airways Ltd. and Raytheon's aircraftbusiness.
Kodak founder George Eastman expanded photography's parameters toX-ray film in 1896 within months of German physicist WilhelmRoentgen's discovery that X-rays would expose photographic plates.
The health group, which makes X-ray film, medical printers andinformation management software and storage systems and employs8,100 people, accounted for nearly one-fifth of Kodak's $14.3billion in sales in 2005. But the unit's operating profit plunged21 percent that year as margins tightened.
With manufacturing operations in Rochester, Windsor, Colo.,Oakdale, Minn., and White City, Ore., as well as Xiamen, China,Guadalajara, Mexico, and Berlin, it competes against such companiesas General Electric Co., Germany's Siemens AG, Royal PhilipsElectronics NV of the Netherlands and Belgium's Agfa-Gevaert.
Kodak hired Goldman Sachs & Co. last May to help explorealternatives for the division. Analysts had expected it to be eithersold outright for anywhere from $2 billion to $4 billion, dismantledand sold in pieces, or turned into a joint venture.
Aside from reducing debt, Kodak said other potential uses for thecash proceeds are under review and will be discussed at its annualmeeting with investors Feb. 8 in New York City.
Kodak shares fell 35 cents, or 1.37 percent, to close at $25.28on the New York Stock Exchange. They have traded in a 52-week rangeof $18.93 to $30.91.
As Kodak enters the final year in its historic, four-year digitalmakeover, it has piled up $2.6 billion in restructuring charges,accumulated $2 billion in net losses over the last eight quartersand axed 27,000 jobs. Even before shedding its health unit, its workforce had dipped below 50,000 from a peak of 145,300 in 1988.
In the July-to-September quarter, Kodak's losses narrowed to $37million as digital profits surged above $100 million. It postsfourth-quarter earnings on Jan. 31.
Kodak selling health-imaging division ; Canada's Onex Healthcare Holdings is paying up to $2.55 billion for the unit
Eastman Kodak Co. is selling its health-imaging business, createdafter the discovery of X-rays in 1895, to Canadian investment firmOnex Corp. for up to $2.55 billion as the picture-taking pioneerbets its future on digital photography and commercial printing.
Kodak said Wednesday it plans to pay down about $1.15 billion indebt and funnel the rest of the proceeds into unspecified digitalventures as profits from its storied film business rapidly erode.
"Getting rid of the health-imaging unit is a positive -- they'vegot another $1 billion that they can play with," said analystShannon Cross of Cross Research in Short Hills, N.J. However, "theystill face the same challenges, and a huge chunk of their earningswas coming from health imaging."
Onex Healthcare Holdings Inc., a subsidiary of Canada's largestbuyout firm, will pay $2.35 billion in cash and up to $200 millionmore if its investors realize an internal rate of return of morethan 25 percent. The deal is expected to close in the first half ofthis year.
Toronto-based Onex Corp., which boasts annual revenues of about20 billion Canadian dollars ($17 billion), teamed up on recenttakeovers of Australia's Qantas Airways Ltd. and Raytheon's aircraftbusiness.
Kodak founder George Eastman expanded photography's parameters toX-ray film in 1896 within months of German physicist WilhelmRoentgen's discovery that X-rays would expose photographic plates.
The health group, which makes X-ray film, medical printers andinformation management software and storage systems and employs8,100 people, accounted for nearly one-fifth of Kodak's $14.3billion in sales in 2005. But the unit's operating profit plunged21 percent that year as margins tightened.
With manufacturing operations in Rochester, Windsor, Colo.,Oakdale, Minn., and White City, Ore., as well as Xiamen, China,Guadalajara, Mexico, and Berlin, it competes against such companiesas General Electric Co., Germany's Siemens AG, Royal PhilipsElectronics NV of the Netherlands and Belgium's Agfa-Gevaert.
Kodak hired Goldman Sachs & Co. last May to help explorealternatives for the division. Analysts had expected it to be eithersold outright for anywhere from $2 billion to $4 billion, dismantledand sold in pieces, or turned into a joint venture.
Aside from reducing debt, Kodak said other potential uses for thecash proceeds are under review and will be discussed at its annualmeeting with investors Feb. 8 in New York City.
Kodak shares fell 35 cents, or 1.37 percent, to close at $25.28on the New York Stock Exchange. They have traded in a 52-week rangeof $18.93 to $30.91.
As Kodak enters the final year in its historic, four-year digitalmakeover, it has piled up $2.6 billion in restructuring charges,accumulated $2 billion in net losses over the last eight quartersand axed 27,000 jobs. Even before shedding its health unit, its workforce had dipped below 50,000 from a peak of 145,300 in 1988.
In the July-to-September quarter, Kodak's losses narrowed to $37million as digital profits surged above $100 million. It postsfourth-quarter earnings on Jan. 31.
