The group announced the sell-off plan alongside its year-end results.

It said it was already in talks with potential buyers about its Prosper inkjet business, which includes imprinting heads and the Prosper high-speed inkjet web presses.

The legacy Versamark inkjet business is not included in the deal, and will remain with Kodak.  

The announcement has raised eyebrows as Kodak chief executive Jeff Clarke had previously described Prosper as one of Kodak’s “four growth engines”, alongside Sonora, Flexcel and Micro 3D printing.

Explaining the change in strategy, Kodak president of inkjet enterprise systems Philip Cullimore told PrintWeek: “It makes a great deal of sense and here’s why. Production digital inkjet is evolving and size matters. Our Prosper business grew by 35% last year and our new Ultrastream head will take us into adjacent markets.

“The business needs greater scale than we can offer. For it to become part of a group with a bigger footprint makes sense,” he stated.

Ultrastream was announced earlier this month. 

In a results call with investors, Clarke stated that to be successful, Prosper and Ultrastream would require “significant scaling and investment in go-to-market resources” and cited possible buyers as having “hundreds or possibly thousands” of sales and business development professionals deployed worldwide, compared with Kodak’s Prosper sales team of circa 40.

He added: “Prosper presses sell for $2m to $3m each. Due to the competitive pressures in the inkjet market, Prosper presses are often placed in loss on the basis that the annuity will yield a system profit over time. Prospective acquirers of Prosper are better positioned to make this magnitude of investment.”

Clarke also said Kodak was limited in its ability to provide financing through third-party suppliers, due to the residual value issues around digital equipment.

The Prosper part of Kodak’s inkjet business had sales of around $89m last year. It employs around 350 people at its Dayton HQ in the US, and 70 at its Israeli controllers operation, as well as a worldwide sales and service team.

Prosper has had a long and costly ramp-up process since Kodak first revealed plans for the next-generation Stream technology at Drupa 2004. The company had forecasted it would sell 25 Prosper presses last year but actually installed 16 and took orders for 22. A further six orders have been carried over to this year, Cullimore said.

It has proved successful as an imprinting system. Cullimore said there were now close to 1,300 imprinting head installations. 

Kodak said it had invested “several hundred million dollars” in Prosper technology.

Kodak has tasked investment bank Sagent Advisors and corporate finance business DC Advisory with managing the sale process. The two companies are connected via Japanese investment bank Daiwa Securities, which has shares in both businesses. Industry sources have played down the Japanese link as pointing to a likely Japanese purchaser, although Canon has been mooted as potentially of suitable scale to take the business on.

Flint, which acquired Xeikon four months ago, could also be in the frame as a potential purchaser. The consumables giant said the Xeikon buy would form the basis of a new digital division.

“It’s got to be someone who believes in continuous inkjet rather than drop-on-demand,” mused one inkjet expert. “Most people in the market already have their own technology. And it would have to be someone with deep pockets because they’re going to need to put even more money in to realise the supposed benefits.”

Cullimore said the likely sale timescale would be “several months or a few more than that” and could be post-Drupa, where Kodak will show Prosper as well as the new Ultrastream technology.

He said Kodak had been approached by a number of potential suitors and that Sagent’s role was to make sure any other possible purchasers had the opportunity to approach Kodak as well. “I can think of a number of places that are a good fit for the business,” he added.

Cullimore said the legacy Versarmark business, based on annuities, head refurbishment and ink was “easily separable from the new-build” part of its inkjet division.

He said his own future, whether at Kodak or not, was “to be determined” pending the outcome of the sale.

The eventual proceeds of the sale will be used to reduce Kodak’s debt. It has $675m of long-term debt and $623m of pension and retirement liabilities on its balance sheet.

Kodak also announced that it will cease development of its nascent silver mesh functional 3D printing business in order to focus on copper mesh technologies. It will continue to make silver halide film for touch screen manufacturers.