Shutterfly to Buy Kodak’s Online Photo Service

Kodak has agreed to sell its online online photo storage and printing service to Shutterfly as part of its plan to stay afloat while working through its bankruptcy filing. The deal will cost Shutterfly US$28.3 million, and the company will absorb all of Kodak’s photo storage customers.

Shutterfly buys Kodak's online businessShutterfly buys Kodak’s online business

Unnamed sources familiar with the sale told Reuters that the deal is moving forward, but they didn’t know when the two companies planned to finish the deal.

Kodak filed for Chapter 11 bankruptcy protection in January and secured a $950 million Citibank loan so it could continue paying employees and creditors. The company, once a top name in the film and camera business, failed to keep up with the changing market — an ironic move considering Kodak invented the digital camera.

The company is also dealing with potential lawsuits from Apple. The Mac and iPhone maker is asking the judge overseeing Kodak’s bankruptcy for permission to file patent infringement claims against the company over camera technology the two co-developed in the 1990s. Typically, lawsuits of this type are suspended during bankruptcy proceedings unless a judge grants special permission.

Kodak’s online photo service customers will be transfered to Shutterfly’s service once the purchase has been finalized. Customers that aren’t interested on moving to Shutterfly’s service will have the opportunity to opt out ahead of the transfer process.