Kodak buys PracticeWorks for $500 m

NEW YORK: Eastman Kodak Co., the world's top maker of photographic film, on Monday said it would buy PracticeWorks Inc., a maker of software for dental practices and medical imaging systems, for $500 million, extending its push into the medical imaging market.

Kodak, which has been scrambling for alternative markets and products to compensate for the diminishing importance of film, will pay $21.50 for each share of PracticeWorks common stock and $7.33 for each share of PracticeWorks Series B preferred stock. It will also assume about $34 million in debt and transaction fees.

The transaction deepens Kodak's reach into the dental imaging market, where it is already a leading provider of X-ray film.

PracticeWorks, based in Atlanta, provides software-based information technology systems and services for dentists in Europe, Japan and the United States. It's Trophy Radiologie subsidiary, based in Paris, is the worldwide market leader in dental digital radiography, and the two companies combined generated revenue of $141 million last year, the company said.

"We will be able to offer choices within a full spectrum of dental imaging products and services, from traditional film to digital radiography and photography," said Dan Kerpelman, president of Kodak's Health Imaging Group.

The deal will add $215 million to Kodak's revenue stream during the first full year after it closes, but be slightly dilutive to earnings through 2005 before adding to its bottom line after that.

Kodak, based in Rochester, New York, has been struggling to diversify its product mix to combat a slump in film sales and intense competition from Japan's Fuji Photo Film Co. Ltd. 4901.T Kodak last month slashed its second-quarter earnings forecast in half because of slow film sales worldwide.

The company made its first big push into medical imaging in 1998 when it bought Imation Inc. It followed that deal with a joint venture with computer maker Hewlett-Packard Inc. HP.N to develop photofinishing equipment and then acquired Lumisys, which produced digital imaging systems for the medical industry.

© Reuters