Kodak bids $50.5 million for developer of compact CRs

January 24, 2005

CR-developer Orex is on the road to becoming a wholly owned subsidiary of Eastman Kodak. The companies involved announced Jan.18 a definitive agreement for Kodak to acquire privately held CR developer Orex for $50.5 million. Closure is subject to regulatory and other approvals. The deal could be complete by the end of the 1Q 2005.

CR-developer Orex is on the road to becoming a wholly owned subsidiary of Eastman Kodak. The companies involved announced Jan.18 a definitive agreement for Kodak to acquire privately held CR developer Orex for $50.5 million. Closure is subject to regulatory and other approvals. The deal could be done by the end of the 1Q 2005.

The smaller company, which is headquartered in Yokneam, Israel, will add approximately $32 million to Kodak's revenue if the deal closes by March 1, according to Kodak estimates. The acquisition will be earnings-neutral in 2005 and accretive thereafter. If the deal goes through, Orex will remain at its principal location in Israel but will operate within Kodak's Health Imaging Group. Last year, Orex generated about $28 million.

Orex was founded in 1996 as Digident, focusing initially on dental CR. The company's portfolio expanded in 2001 into specialty medical markets.

If it merges into Kodak, Orex's compact CR products will fit a niche in that company's portfolio now partly filled by the compact CR systems acquired when Kodak purchased Lumisys four years ago. Kodak also obtained a line of high-quality film digitizers from the Lumisys purchase, as well as the Web-based radiology news organization Aunt Minnie.

(Kodak announced Jan. 4 the sale of Aunt Minnie to market research and consulting firm IMV for a publicly undisclosed amount.)

Unlike Lumisys' CR systems, which require manual loading of CR plates, Orex products are highly automated. They are designed for placement in specialty-driven facilities such as diagnostic imaging centers and dental offices, as well as hospital departments including emergency, pediatrics, and intensive care.

"Kodak announced a few months ago that we are making a more concerted effort to sell into specialty markets such as orthopedics, dentistry, and diagnostic imaging centers," said Kodak spokesperson John LaBella. "Orex products will give us a tailor-made, robust portfolio especially adapted to those markets."

The company has installed about 4000 of its CR systems in countries around the world, according to Orex. Of these, about 250 are being used by the U.S. military.

Kodak plans to employ its own distribution channels to augment Orex channels already in place. Among these will be channels associated with Kodak's Non-Destructive Testing (NDT) unit, which designs and produces digital and film-based NDT systems. NDT systems are applied to industrial uses such as looking for cracks in pipelines or corrosion in nuclear power reactor valves.