Private equity firm Apollo Global Management agreed to acquire U.S. digital imaging company Shutterfly for $2.7 billion, including the company’s $900 million of debt.
Apollo also announced on Monday that it would buy the privately held Snapfish, a small internet-based retailer of photography products, with plans to merge it with Shutterfly. The equity firm will pay a reported $300 million for Snapfish.
Apollo, and its consolidated Apollo subsidiaries, agreed to pay $51 per share in cash for Shutterfly, a 31% premium to the company’s value of $38.91 on April 23, the last trading day before a media report speculating that Apollo Funds were considering a bid for the company.
The deal, announced on Monday, is the culmination of several years of private equity interest in Shutterfly. Shutterfly’s business has become increasingly commoditized and competitive, forcing it to explore a sale.
“We are extremely excited for our funds to acquire Shutterfly,” said David Sambur, senior partner at Apollo.
Sambur said that Shutterfly has “cultivated a deep connection with customers” through its three divisions: Shutterfly Consumer, Shutterfly Business Solutions, and Lifetouch.
Shutterfly faces increasing competition from other online digital photography services companies such as Vistaprint, as well as brick-and-mortar retailers, including Target, Walmart, and Costco, that offer low-cost digital photography products and services.
Shutterfly had been approached by several buyout firms over the years about a deal, including Thomas H. Lee in 2016 and Silver Lake Partners LP in 2014.
In February, Shutterfly announced the formation of a committee to continue its ongoing review of “strategic alternatives” for the company.
“We ran a broad and comprehensive process, engaging with a sufficient number of potential buyers, and are pleased that the process culminated in a transaction that maximizes value for Shutterfly stockholders,” said Shutterfly’s chairman William Lansing
“We look forward to working closely with Apollo as we continue to build a compelling service that enables deeper, more personal relationships for our customers,” Lansing added, “and to advance our digital and manufacturing capabilities to support sustainable growth.”
Shutterfly last year acquired privately held Lifetouch, which helps schools and families shoot professional photos, for $825 million in cash.
In a separate press release issued Monday, Shutterfly announced the appointment of Ryan O’Hara as its president and chief executive officer, effective June 24.
The Shutterfly transaction is expected to close by early in the fourth quarter of 2019.
Upon completion of the sale, Shutterfly will become a privately held company, and its shares will no longer be listed on the NASDAQ.