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News:

January 31, 2018

Shutterfly acquires Lifetouch

Shutterfly, the online retailer and manufacturer of personalized products and services based in Redwood City, CA, USA, and Lifetouch, the privately held specialist in school photography headquartered in Eden Prairie, MN., USA, have announced a definitive agreement for Shutterfly to acquire privately-held Lifetouch for $825 million in cash. Lifetouch achieved revenue of US$ 963.9 million and EBITDA of US$111.3 million for the period ended June 30, 2017.


In 2017, Shutterfly recorded Net revenues of US$ 1,190.2 million, a 5 percent year-over-year increase. Consumer net revenues totaled US$ 997.0 million, flat year-over-year as anticipated, as growth in the Shutterfly brand was offset by loss of revenue from three websites the company shut down. Shutterfly Business Solutions net revenues totaled $193.2 million, a 41 percent year-over-year increase. GAAP Operating income totaled US$179.0 million, a 16 percent year-over-year increase. Net income was US$ 111.7 million or US$ 3.37 per share. Adjusted EBITDA was US$ 215.6 million, a $20.8 million or 11% year-over-year increase.

According to a press release, Lifetouch is the clear leader in school photography in the USA. The company photographs more than 25 million children annually during the cherished fall picture day tradition, serving more than 10 million households, including more than one million new kindergarten households annually, across more than 50,000 schools, providing Shutterfly with a highly complementary business. Through the acquisition, Shutterfly expects to gain access to many Lifetouch customers to offer them the company’s cloud-photo management service, product creation capabilities, mobile app, and broad product range. Lifetouch will offer Shutterfly’s product range to its customers, and will be able to accelerate the development its online platform. The companies also expect to realize significant supply chain, manufacturing, and fulfillment synergies over time.

The Board of Directors of Shutterfly and the trustee of the Lifetouch ESOP both approved the acquisition, which remains subject to customary closing conditions, including regulatory approval. The companies expect the acquisition to close in the second quarter of 2018. Shutterfly will finance the acquisition with an incremental $825 million Term Loan B issuance. In connection with the acquisition, for the time being, Shutterfly will suspend its share repurchase program in favor of near-term de-levering.

Shutterfly expects the acquisition to result in approximately US$ 935.0 million of additional Net revenues, and approximately US$100.0 million of additional Adjusted EBITDA, in the twelve-month period following the closing of the acquisition. The combined Company targets a minimum of US$450 million of Adjusted EBITDA by 2020.

“Shutterfly and Lifetouch, two undisputed leaders in their respective industries, are both built around the mission of helping customers share life’s joy through photos,” said Christopher North, President & Chief Executive Officer of Shutterfly. “The two companies are uniquely well suited for one another, with similar target customers as well as complementary manufacturing capabilities. Most exciting of all is the potential to bring together Lifetouch’s unique access to millions of families who value high-quality photographic portraits with Shutterfly’s cloud photo management, product breadth, and product creation capabilities. Together, the two companies will accelerate each other’s respective strategies, driving shareholder value through consumer growth and significant incremental profits and cash flow. We’re excited to welcome the Lifetouch team to the Shutterfly family.”

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