Kodak ( EK) announced the acquisition of two digital-printing companies and said dilution from the transaction will reduce expected 2004 earnings.

Kodak will buy out the half-interest it doesn't already own in Heidelberger Druckmaschinen's NexPress Solutions LLC, and buy in its entirety Heidelberger's Heidelberger Digital LLC. NexPress makes digital color printing systems, while Heidelberger Digital makes black-and-white systems.

Financial terms call for periodic payments to Heidelberger over two years based on an earn-out formula, with a maximum price of $150 million cash. Additional payments will be based on sales targets.

Kodak sees the acquisitions adding $175 million to 2004 revenue while creating incremental earnings dilution. As a result, it lowered its 2004 earnings estimate to $2.05 to $2.35 a share from $2.25 to $2.55 a share. Analysts surveyed by Thomson One Analytics were forecasting full-year earnings of $2.32.

The shares fell $2.84, or 0.8%, to $27.

"This move advances Kodak's strategy of diversifying its business portfolio and accelerates its participation in the digital commercial printing industry," the company said. Despite the buyout, Kodak repeated that it expects 2004 acquisition activity to be significantly lower than the $1 billion it spent in 2003.

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