Shutterfly Gets To Pick Off the Kodak Digital Carcass (SFLY, EKDKQ)

Shutterfly, Inc. (NASDAQ: SFLY) has entered into an agreement with Eastman Kodak Company (EKDKQ) over the proposed sale of certain assets of the KODAK Gallery on-line photo services business for $23.8 million. Effectively, Shutterfly is providing stalking horse bid in the court-supervised auction process.

The terms of the agreement include the transfer of Gallery customer accounts and images in the U.S. and Canada to Shutterfly.

What is amazing here is that this is the operation which Kodak should have been able to dominate any of the smaller online services.  It did not, and the digital age ate the company alive because it was too slow to move in the digital image direction.  Sadly, it was a lose-lose situation either way because monetizing this effort has not replaced what Kodak has lost.

KODAK Gallery is said to have over 75 million users and it has popular mobile apps.

Picking off the bones of a carcass is rewarding.  Just look at the reaction in Shutterfly shares with a gain of 8% to $29.21 on the news.

The press release does not confirm whether or not Antonio Perez has to offer submit a pound of flesh for each unit sold off from the company he led into bankruptcy.