Eastman Kodak Co. cut loose its health group last week, agreeing to sell one of the most prominent names in X-ray technologies to Onex Healthcare Holdings, a subsidiary of Onex Corp. in Toronto, for approximately $2.55 billion.
It was right in line with the corporate goals of Kodak to focus on a certain aspect and get back to a core strategy for Kodaks business, said Steve Tobin, a healthcare information technologies analyst at market research firm Frost & Sullivan. I think it continues to say that there are only a few dominant players in the imaging industry right now.
The deal may stir up some nostalgia but it should not have much effect on the business of snapping images of broken bones, congested lungs and other assorted maladies, said Leonard Berlin, chairman of the department of radiology at 224-bed Rush North Shore Medical Center in Skokie, Ill. The name Kodak has been synonymous with X-ray. Ill be saddened when there is no more Kodak. Nonetheless, from a practicing point of view, I dont think it will affect us, Berlin said.
Onex, a publicly traded diversified holding company and one of Canadas largest corporations with $19 billion in revenue, agreed to buy Kodaks health group for $2.35 billion in cash at closing, expected in mid-2007, plus up to $200 million in additional payments if Onex receives a return of more than 25% of its investment.
About 8,100 employees associated with the Kodak health group will continue with the business in Rochester, N.Y. Included in the deal are the manufacturing operations of health imaging products as well as a Rochester office building. Through the 12 months ended Sept. 30, 2006, Kodaks health group reported revenue of $2.54 billion.
I think its a great thing for us, said David Waldman, a radiologist and chief of the department of imaging sciences at the 973-bed Strong Memorial Hospital of the University of Rochester (N.Y.) Medical Center. The Kodak company has been having difficulty balancing their two buckets of business.
The teaching hospital has a research arrangement with Kodak. The Onex company, I think, will have the capital to move their technology forward, Waldman said.