Breaking: Kodak Explores Sale of Flexible-Packaging Division

[RattyMouse]

As a long time follower of Kodak's stock, I've watched it drop 35% the past few weeks. Well, just now, minutes ago it popped up 20%. What? Looking for news I found this headline:

Kodak Explores Sale of Flexible-Packaging Division

https://www.wsj.com/articles/kodak-...g-division-1532622293?mod=yahoo_hs&yptr=yahoo
The story is behind a paywall so I can't get all the details.

I dont follow the printing side of the business very well but this seems to be the bread and butter of what Kodak is today. The market cap of Kodak is 250 million dollars, yet the sale of this part of the company is expected to bring in 400 million dollars. Noted by the WSJ is that Kodak carries 400 million or so in debt.

But what is left of Kodak after this potential sale? Not much. Is what is left even sustainable?

 

[MattKing]

I was able to read the story initially, but it now is behind the paywall again.
If I recall correctly, the numbers quoted in it indicated that that division of Eastman Kodak had 2017 revenues of $145 million USD with net profit of $37 million USD.
Eastman Kodak is a printing services and equipment company.
They were hit hard by the Trump imposition of aluminum tariffs, because their major product is printing plates, which are made from aluminum. They were forced to increase their prices by 9% as a result of the tariffs.

 

[RattyMouse]

I was able to read the story initially, but it now is behind the paywall again.
If I recall correctly, the numbers quoted in it indicated that that division of Eastman Kodak had 2017 revenues of $145 million USD with net profit of $37 million USD.
Eastman Kodak is a printing services and equipment company.
They were hit hard by the Trump imposition of aluminum tariffs, because their major product is printing plates, which are made from aluminum. They were forced to increase their prices by 9% as a result of the tariffs.

So that would represent about half the company, give or take a bit. Yes, I did read that the aluminum prices that have been going up since the tariff war started were a huge cause of concern to Kodak.

 

[MattKing]

So that would represent about half the company, give or take a bit. Yes, I did read that the aluminum prices that have been going up since the tariff war started were a huge cause of concern to Kodak.

Hmmm - half the corporation's business in return for enough money to extinguish its debt.

 

[MattKing]

Better than a hair brained scheme like a KashMiner.

Yeah, but that was really nothing more than a licensing scheme hoping to gain stock market "glitter" from the Kodak name.
This sale would mean a loss of a real source of ongoing profit, and a loss of synergy with Eastman Kodak's other printing industry business.

 

[RattyMouse]

Yeah, but that was really nothing more than a licensing scheme hoping to gain stock market "glitter" from the Kodak name.
This sale would mean a loss of a real source of ongoing profit, and a loss of synergy with Eastman Kodak's other printing industry business.

Yes, and worse, the rest of Kodak's printing business is not anywhere near as successful as the one they are potentially selling off.

 

[RattyMouse]

Yeah, but that was really nothing more than a licensing scheme hoping to gain stock market "glitter" from the Kodak name.
This sale would mean a loss of a real source of ongoing profit, and a loss of synergy with Eastman Kodak's other printing industry business.

Hmm....the initial surge of buying seems to have subsided and KODK is now up +9%, over half the initial boost from this news has gone.

 

[cmacd123]

Closing the pop up that said continue with your subscription actually allows reading the article which has no more details than the summary above.

 

[RattyMouse]

Closing the pop up that said continue with your subscription actually allows reading the article which has no more details than the summary above.

I get no pop up when I click that link. I get the first paragraph and then am told to sign in or subscribe.

Anyway, this is a developing story so it's no surprise that there are not many details.

I was watching Kodak stock all day at my desk at work and it went from -4% to +20% in just a few seconds. Something HAD to be up to cause that to happen so I went looking for news. The above is what I found.

 

[RattyMouse]

Well the balloon is really deflating, with that 20% pop now down to only +4.5%. Looks like a LOT of bag holders used this sudden surge in price to cash out of Kodak stock.

 

[cmacd123]

Well the balloon is really deflating, with that 20% pop now down to only +4.5%. Looks like a LOT of bag holders used this sudden surge in price to cash out of Kodak stock.

well Plastic Bags ARE a form of flexible packaging....

 

[RattyMouse]

Well, with just a few minutes of trading left, virtually all of the 20% pop is now gone. Share prices are now just +1% for the day. It looks like a failed short squeeze. The bears have won.

 

[BrianShaw]

Not much, really, but...

http://www.wxxinews.org/post/report-kodak-exploring-sale-its-flexible-packaging-division

 

[RattyMouse]

I refreshed my memory on EK's business structure and the flexible packaging division of the company is not half of Kodak. Not even close. It's roughly the same size as the film division. However, it is the part of EK that is growing the fastest in terms of revenue growth as well as profits. Most of the rest of the company is either stagnant or declining.

But if this deal were to go through, EK would be able to retire their debt and pay off their preferred shareholders. That's a ticking time bomb that must be dealt with.

 

[parakhgroup]

Thanks for this update that Kodak has started a process to sell its Flexographic Packaging Division. Flexible packaging industry is growing day by day and it's strange decision by Kodak selling their FPD which is reporting more than 150 million business.

 

[WilmarcoImaging]

Growth means business valuation is attractive compared to a mature or declining business. The CEO has a duty to maximize shareholder value, and it could be that selling a business while in growth mode (FPD) is the best way of delivering value to shareholders in the near-medium term horizon.

 

[jtk]

Think Sears.