Kodak sells online photo business

Eastman Kodak has agreed to sell its online photo services business to Shutterfly for $23.8 million, kicking off the bankrupt photography pioneer's relaunch as a much slimmer company, although a patent sale seen crucial to its turnaround may still be months away, Reuters writes.

The once-iconic company that invented the handheld camera has said it will quit the camera business and is expected to fetch $1 billion to $2 billion from the sale of about 1 100 digital patents, which is due to get under way by 30 June.

A source familiar with the patent sale said the process was moving forward, but added that the completion was not expected anytime soon.

Kodak says the deal with Shutterfly followed a “stalking horse” bid - a starting bid or minimally accepted offer that other bidders must surpass in a court-supervised auction - from the Web-based personal publishing service, The Montreal Gazette reports.

Shutterfly shares rose 16.5% to $31.36 in extended trade, following the news. The stock had closed at $26.91 on Thursday on the Nasdaq.

Shutterfly said it will transfer Kodak Gallery customer accounts and images in the US and Canada to Shutterfly, and will allow customers to opt out of the transition if they do not want their photos to be transferred.

“This sale is consistent with our objective of focusing Kodak on a core set of businesses in which we can most profitably leverage our technology and brand strengths, and provides a well-proven mechanism for ensuring that Kodak receives maximum value from these assets,” Dayton Business Journal quotes Pradeep Jotwani, Kodak's president, consumer businesses and chief marketing officer, as saying in a prepared statement.

Kodak is seeking US Bankruptcy Court approval of sale and auction procedures by late March. Other potential buyers could submit alternative bids. Kodak hopes to complete the sale this spring.