Eastman Kodak yesterday agreed to buy a Canadian software firm as part of a strategy to bolster its commercial printing business.

Kodak announced plans to buy Vancouver-based Creo for $980 million (€752.4 million) in cash, or $16.50 a share, to strengthen one of the "three pillars" of its digital strategy, which includes digital and health imaging.

Shares in Creo rose nearly 14 per cent to $16.33 in morning trading while shares in Kodak edged up eight cents to $32.78. Shares in Creo had closed at $14.36 on Friday.

Mr Daniel Carp, Kodak chief executive, said the purchase marked "a big long-term play in an industry that is converting to digital".

The deal also concludes the acquisition plan Kodak announced in September 2003 when it slashed dividends and earmarked $3 billion for digital technology while phasing out its traditional film business.

Kodak, the world's largest film maker, said the Creo purchase would help the company meet guidance of $3 operational earnings per share next year.

But shareholder unrest at Creo could threaten the closure of the deal. Dissident Creo shareholders have demanded a "change of direction" and are seeking to oust its chief executive at a meeting on February 10th.

For Kodak, the deal is the latest in a series of acquisitions intended to beef up its graphic communications business, which includes technology and devices that print invoices, brochures and direct mail marketing.

Creo makes workflow software for printers to manage the movement of text, graphics and images from computer to printing press. - (Financial Times Service)