Eastman Kodak ( EK) Monday said it had agreed to acquire Canada's Creo ( CREO) for about $980 million, or $16.50 a share, in cash.

The acquisition of Creo, described as a premier supplier of prepress systems used by commercial printers worldwide, is the latest step in Kodak's plan to reshape itself as a digitally-based company.

"Graphic communications represents one of the three pillars of Kodak's digitally-oriented growth strategy," said Kodak. "The purchase of Creo strengthens that pillar, and essentially concludes the company's acquisition plan, announced in September 2003."

That plan, which included a sharp reduction in the company's quarterly dividend so that the funds could be used for acquisitions, drew sharp initial criticism, including shareholder lawsuits, but Kodak management has ploughed ahead, with some success. The stock price, for instance, has rebounded from its selloff around the time of announcement, when it fell from about $31 to $24 a share during a couple of months. It closed at $32.70 Friday.

Creo jumped $2.03, or 14%, to $16.39 in the premarket Monday.

Kodak expects Creo will add at least 5 cents a share to operational earnings, driven by cost savings and revenue growth. In 2006, Kodak also expects approximately $700 million of incremental revenue from Creo.

"With this move, we are more confident than ever in our ability to meet or exceed our operational earnings guidance of $3.00 a share in 2006," Kodak said.

The imaging company last week said it lost $12 million, or 4 cents a share, in the fourth quarter, compared with a profit of $19 million, or 7 cents a share, a year ago. Sales rose 3.2% from a year ago to $3.77 billion. Excluding items, Kodak earned 78 cents a share, about 13 cents better than analysts had forecast.