Rochester, N.Y. -
said Thursday it will further divest of its consumer photography businesses by selling its online Kodak Gallery photo services business to Shutterfly for $23.8 million.
The former photography giant, which is struggling under federal bankruptcy protection, said last month that is was shuttering its photographic hardware business, and it will be looking a generate $1 billion to $2 billion by selling a portfolio of 1,100 digital patents this year.
Kodak said the deal with Shutterfly followed a "stalking horse" bid. Shutterfly plans to transfer Kodak Gallery customer accounts and images in the United States and Canada to Shutterfly, and will allow customers to opt out of the transition if they want to.
Kodak Gallery provides online sales of user generated images on custom printed photobooks, cards and albums. The service has more than 75 million registered users.
Kodak said that going forward it will be concentrating its remaining consumer business on retail and destination photo solutions as well as home printing products.
Shutterfly, which has offered a competitive service to Kodak Gallery, bought privately held card design company Tiny Prints last year for $333 million in cash and stock, and continues to compete with Hewlett-Packard and American Greetings in online custom photo products.