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Shutterfly to go Private Post $2.7B Buyout by Apollo Global

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Private-equity firm Apollo Global Management has agreed to acquire all outstanding shares of Shutterfly, Inc. . The value of the deal stands at nearly $2.7 billion. Apollo will pay $51 per share to Shutterfly’s shareholders, a 31% premium to the company's value on Apr 23, the last trading day before the news surfaced.

Notably, Shutterfly’s board of directors has approved the deal, which is likely to be sealed by early fourth-quarter 2019, subject to customary closing conditions. On completion of the transaction, Shutterfly will become a privately held firm.

Shutterfly’s chairman of the board, William Lansing, said that “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, and to advance our digital and manufacturing capabilities to support sustainable growth.”

On the fourth-quarter 2018 conference call, management stated that third parties approached for the potential acquisition of the company. Soft consumer growth and increasing competition might have forced Shutterfly to explore a sale. In a year’s time, the stock has lost 48.2% compared with the industry’s 41.9% decline.

 



Moreover, Shutterfly’s business is highly seasonal and thus it generally incurs losses in the first three quarters of the year. Also, Shutterfly’s net revenues and performance are affected by vacation and other travel trends as these drive digital camera sales. Weaknesses in the travel industry owing to macro-economic slowdown or political instability might hurt the company’s business.

However, on Jan 30, 2018, Shutterfly announced that it has reached a deal to acquire Lifetouch — a privately held online photography company — for $825 million in cash. The deal, which was closed on Apr 2, 2018, has given Shutterfly a new lease of life.

Zacks Rank & Key Picks

Shutterfly has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include China Distance Education Holdings Limited (DL - Free Report) , DHI Group, Inc. (DHX - Free Report) and Perion Network Ltd. (PERI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

China Distance Education Holdings and DHI Group long-term earnings are expected to witness 15% and 20% growth, respectively.

Perion Network reported earnings beat in the trailing two quarters.

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