18 November 2018 Business

Kodak finds private equity home for flexo division

Kodak has taken flexo off its balance sheet as it pockets $390 million to ease debt burden while continuing link with the plate business.

The sale of Kodak's flexible packaging division to Montagu Private Equity will net Kodak up to $390 million. Kodak will also continue to sell services and products to the new business – at least in the start up phase.

Chris Payne, who had headed the division, becomes CEO of the new business which “will have the same organisational structure, management team and growth culture that has served Kodak's flexographic packaging division well in recent years” according to a statement from the new owners.

The deal means that customers of the Flexcel NX plate will continue to receive the same service and support as previously, using the same channels to deliver the hard top to a steadily increasing number of converters. There are no plans to drop the Kodak brand.

Montagu director Ed Shuckburgh comments that the private equity firm will “focus on the acquisition of companies producing products or services that would be badly missed if the business did not otherwise exist”.

Its reasoning is posited upon growth in demand for the flexo product. While Kodak is far from the only player in the market where Cyrel has been market leader and is now joined by products from Flint, Asahi and Fujifilm among others. But the flexible packaging market is growing and flexo is part of that, with rates reckoned to be between 2-11% a year depending on technology and location.

The drive towards shorter runs and greater quality works for Kodak as this is also expected to drive growth of mid web presses that are faster to make ready and better suited to shorter production runs that large web CI machines with print units that need to be cleaned up between jobs. The only risk is that flexible packaging will decline in popularity because of its use of plastic, though development of sustainable cellulose based alternatives is being accelerated.

Flexcel is already present in 70 countries, opening the door to a larger spread of customers in so far untouched parts of the globe. Montagu brings networking, expertise and further resources to the business, it says.

Montagu is a European private equity business specialising in mid market firms, with no previous direct investments in the print and packaging arena. It has a head office in London with other offices in Paris, Frankfurt and Warsaw. It also tends to hold on to investments for three or so years before cashing in.

Gareth Ward

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