Shutterfly only bidder for Kodak Gallery customer accounts

Shutterfly had placed a "stalking horse" bid of US$23.8 million

Online photo service Shutterfly has emerged as the only bidder for the customer accounts and images of Kodak Gallery online photo services business, the companies said Wednesday.

Eastman Kodak, which filed in January for bankruptcy protection, entered into an agreement with Shutterfly in March for the sale of certain assets of its online photo services business for US$23.8 million.

The terms of the agreement included the transfer of gallery customer accounts and images in the U.S. and Canada to Shutterfly in Redwood City, California. A Kodak spokesman clarified in March that the gallery website, name, and intellectual property were not part of the deal.

Kodak and Shutterfly plan to close the acquisition soon after receiving the final approval from the bankruptcy court in New York. Shutterfly will then work with Kodak to transfer the customers and images onto the Shutterfly platform.

The March agreement with Shutterfly was described as a "stalking horse" bid that set the minimum price for other bids for the business in a court-supervised auction.

Kodak, which faced challenges in making the transition to digital technology, has since July been "exploring strategic alternatives" including the sale of its digital imaging patent portfolios. It said it had over 1,100 U.S. patents that are fundamental to the digital imaging industry.

Other technology companies have raised funds through sales of patents. Bankrupt Nortel Networks raised $4.5 billion through the sale of patents and patent applications to a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony. AOL said earlier this month that it has entered into a definitive patent sale and licensing agreement with Microsoft, that would fetch it over $1 billion in cash. Microsoft said it had struck a deal with Facebook to sell it 650 of the AOL patents and patent applications.

In a filing on Wednesday to the U.S. Bankruptcy Court for the Southern District of New York, Kodak has informed of the cancelation of the auction of the Kodak Gallery assets, which was scheduled for Thursday, as no other competing bids were received by the bid deadline of April 20.

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John Ribeiro

IDG News Service
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