Kodak strategists look at options for Health Group

May 4, 2006

Kodak is exploring “strategic alternatives” for its Health Group. These include partnerships with other companies as well as the sale of its century-old radiology-based business.

Kodak is exploring "strategic alternatives" for its Health Group. These include partnerships with other companies as well as the sale of its century-old radiology-based business.

"We have discussed internally the consolidation happening in the industry and the opportunities in front of us," said Kevin J. Hobert, president of the Health Group and senior vice president of Eastman Kodak. "There are different ways to participate in that."

Hobert said Kodak's board of directors has given the green light to pursue options. The company has enlisted Goldman, Sachs as an adviser.

In early trading, Kodak stock fell $2.47 to $24.90, nearly 8% of the previous day's closing price, following disappointing quarterly results and news that the company was considering alternatives for its health unit. The stock regained about half its loss by midday.

No definitive steps have yet been taken toward any specific alternative, Hobert said. Rumors of a pending divestiture of the Health Group, whereby pieces would be split among major OEMs, "are more advanced than reality," he told DI SCAN.

"We are at the start of this process," he said. "We are looking at a range of alternatives, and we just won't be able to update until we have something more definitive."

The process could take months, said Hobert, who predicted there will be "a lot of interested parties."

Whichever route is chosen, he said taking care of Kodak customers and employees will be priorities.

"We have spent a long time in this industry building a reputation of trust," Hobert said. "It's very important to maintain that."