Kodak has reached a definitive agreement to sell its flexographic packaging division to Montagu Private Equity for a total value of up to $390m.

The estimated total consideration of the deal includes a base purchase price of $340m and potential earn-out payments of up to $35m until 2020.

It also includes $15m as a prepayment to Kodak to offer various services and products to the business.

Montagu will operate the division as a new standalone company with a focus on developing, manufacturing and marketing flexographic products such as the Kodak Flexcel NX System for the packaging print segment.

The divestment will allow Kodak to focus on its commercial printing, film, and advanced materials services business.

Kodak CEO Jeff Clarke said: “This transaction is an important turning point in our transformation and is a significant, positive development for Kodak.

“The sale of the Flexographic Packaging Division unlocks value for shareholders and strengthens our financial position by providing a meaningful infusion of cash, which allows us to reduce debt, improving the capital structure of the company and enabling greater flexibility to invest in our growth engines.”

“This transaction is an important turning point in our transformation and is a significant, positive development for Kodak.”

Montagu will continue to operate the business with the same organisational structure, management team and growth culture.

Kodak Flexographic Packaging Division president Chris Payne will serve as the CEO of the new company.

The transaction is subject to the receipt of required regulatory approvals and satisfaction of closing conditions, and will close in the first half of next year.

After closing the transaction, Kodak will focus on the growth of its Sonora environmental plates, enterprise inkjet, workflow software, and brand licensing.