Shutterfly, an online photo-publishing company that allows users to create personalized photo albums and calendars, will acquire the Kodak Gallery  of Eastman Kodak Co. for $23.8 million at auction. Shutterfly made a stalking horse bid in early March, to precipitate a bidding war. Shutterfly won after no other bidders came forth, those familiar with the matter said.

Eastman Kodak Co. filed for bankruptcy in late January, but before the deal is complete, it will still need to have the approval of the bankruptcy court.  After the courts approval, the two companies will begin the task of transitioning Kodak Gallery’s U.S. and Canada users and images onto Shutterfly’s platform.

Kodak Gallery grew out of its purchase of Ofoto, which Kodak was purchased in 2001  for less than $100 million.  It was then renamed Kodak Easy Share Gallery in 2005, and generated $150 million at its peak, but according to those familiar with the matter, Gallery was never profitable.

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