Acquires Shutterfly in an all-cash transaction valued at $2.7 billion; separately enter into a definitive agreement to acquire Snapfish.
In a major Photo Industry overhaul, global alternative investment manager Apollo has entered into a definitive agreement to acquire all of the outstanding shares of Shutterfly, one of the leading retailer and manufacturing platforms of printed photographic products. The acquisition for $51.00 per share in cash, or enterprise value of approximately $2.7 billion, the company announced.
Simultaneously, Apollo announced that the Apollo Funds entered into a definitive agreement to combine Snapfish, the internet-based retailer of photography products, with Shutterfly. Upon the closing of the Snapfish transaction, the Snapfish owners will become significant minority owners in the combined Shutterfly and Snapfish business.
The Shutterfly Board of Directors unanimously approved the agreement with the Apollo Funds and recommends that Shutterfly stockholders vote in favour of the transaction. Upon completion of the Shutterfly transaction, Shutterfly will become a privately held company, and its shares will no longer be listed on the NASDAQ Global Select Market.
“We are extremely excited for our funds to acquire Shutterfly,” said David Sambur, Senior Partner at Apollo. “At a time when billions of photos are taken every day, Shutterfly has led the charge as a pioneer of personalized photo products and school photography, helping consumers capture, preserve and share life’s most important moments. We look forward to working with Shutterfly’s talented employees and supporting further investments in technology to drive the continued growth and success of the business.”
The Shutterfly transaction is expected to close by early fourth quarter 2019. The Snapfish transaction is expected to close simultaneously with the Shutterfly acquisition.
Neil Cohen, Chairman of Snapfish and CEO of District Photo, Inc., commented, “We look forward to working with the Apollo Funds. The Apollo Funds bring substantial financial resources as we continue to invest in innovation, as well as valuable strategic perspectives to drive growth over the coming years. We are committed to supporting the company and continuing our relationship as a fulfillment partner.”
“We are thrilled to partner with two pioneers of the photo personalization industry in these innovative transactions,” said David Sambur, Senior Partner at Apollo. “We are confident that this transaction will create an opportunity for innovation and continued growth in the photo and personalized photo products industry. We are excited to work with Neil and the Snapfish team in this transaction, and to benefit from their market expertise after three generations in the photo product business. We believe that both companies will be better positioned to operate in a competitive marketplace through their enhanced ability to invest in product innovation to deliver the best consumer experience.”
The online Photo industry was waiting for something big like this for years with quite a few online vendors shutting down, being absorbed by other players and retailers scaling down in-store photo operations. David Haueter, in his article points out, “The latest announcement is possibly the most dramatic yet, as longtime competitors Shutterfly and Snapfish have both been acquired and will be combined into one company. This is kind of like Ford merging with Chevy, which ironically has also been predicted by some automotive analysts.”
Market reports show that Shutterfly has gained popularity over various categories like prints, photo books, cards, and wall décor, while Snapfish’s popularity has fell over the last few years. In InfoTrends 2018 US Photo Merchandise Survey, only 3% of consumers said they placed their last photo card order with Snapfish, which put them 11th on the list. Shutterfly was second with 18%. In photo books, Snapfish was 9th with 4%, while Shutterfly was first with nearly 34%.
David Haueter opines, “Short term, we may see Shutterfly positioned more as a premium provider of photo products and prints, with Snapfish positioned as a lower-cost alternative for more budget-minded consumers.”
“Long term, we wouldn’t be surprised to see Shutterfly and Snapfish merge completely, with one company name (Shutterfly) and one website. It should be an interesting ride,” he adds.
