Shutterfly to Acquire Privately Held Lifetouch

Shutterfly to Acquire Privately Held Lifetouch

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 Redwood City, CA—Shutterfly and Lifetouch, a national leader in school photography, announced a definitive agreement for Shutterfly to acquire privately held Lifetouch for $825 million in cash.

Shutterfly is a leading online retailer and manufacturer of highquality personalized products and services. For more than 80 years, Lifetouch has been the professional photography choice for schools and families. Headquartered in Eden Prairie, Minnesota, Lifetouch is 100% employee owned.Lifetouch_Logo“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 and 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,” North added.

“Together, the two companies will accelerate each other’s respective strategies. They will driving shareholder value through consumer growth and significant incremental profits and cash flow. We’re excited to welcome the Lifetouch team to the Shutterfly amily.”

Lifetouch

Lifetouch is the clear leader in school photography. The company photographs more than 25 million children annually during the fall picture day tradition. The company serves more than 10 million households, including more than one million new kindergarten households annually, and more than 50,000 schools. Moreover, in Lifetouch’s fiscal year ended June 30, 2017, revenue was $963.9 million, and EBITDA was $111.3 million (audited).Lifetouch-pix

The acquisition is designed so that Lifetouch will provide Shutterfly with a highly complementary business. Shutterfly expects to adopt many Lifetouch customers as Shutterfly customers, where they can take advantage of Shutterfly’s cloud-photo management service, product creation capabilities, mobile app and broad product range.

Lifetouch will be able to offer Shutterfly’s broader product range to the Lifetouch customer. It also expects to accelerate the development of its online platform. The companies also expect to realize supply chain, manufacturing and fulfillment synergies over time.

“I’m excited to join the Shutterfly team,” said Michael Meek, CEO of Lifetouch. “Shutterfly and Lifetouch have a common mission and a common culture. Similar to Shutterfly, Lifetouch has a large and loyal customer base. It also has a talented and dedicated team that is excited about the opportunities at the combined company. As Lifetouch continues to leverage technology to better serve our customers, Shutterfly’s capabilities across photo management, product creation and ecommerce will accelerate this transformation.”

Acquisition Details

The board of directors of Shutterfly and the trustee of the Lifetouch ESOP both approved the acquisition. However, it 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 $935.0 million of additional net revenues in the twelve-month period following closing of the acquisition. It also projects approximately $100.0 million of additional adjusted EBITDA.

The combined company targets a minimum of $450 million of adjusted EBITDA by 2020. shutterflyinc.com

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