16 June 2019 Business

Smile please! Deal unites largest photobook producers

Shutterfly and Snapfish are coming together to create the largest digital print photo products group in North America with designs on expansion into wider areas of print.

The two giants of the online photo printing world are to be merged under single ownership. But this is not a case of Snapfish acquiring Shutterfly, nor the latter buying the former. Both are being bought by Apollo Global Management to create what will be comfortably the largest player in online photo product printing.

Under the terms of the deal Shutterfly’s shareholders receive $51 each equating to $2.7 billion. The company has been on the block for a while having created a strategic review committee at the start of this year. The first change will be the recruitment of Ryan O’Hara as president and CEO from next week.

Outgoing CEO Christopher North returns to London after three years in charge of the business.

And with the completion of the deal for Shutterfly, Apollo will buy rival Snapfish, but contingent on the first deal being completed in Q4. Both deals will complete at the same time.

Snapfish is a subsidiary of District Photo which bought what was an HP facility in 2015. It is also the owner of Harrier LLC the UK’s largest photo products printer in Newton Abbott, Devon. Under the terms of the deal, Snapfish is valued at $300 million. District Photo will continues as a fulfilment partner to Snapfish according to District Photo CEO Neil Cohen.

Infotrends estimates Snapfish to have 15% of the US market for photo products with Shutterfly at 35%. Both companies are major customers for HP Indigo. Shutterfly ordered 25 B2 Indigos at Drupa and a year later followed up with another order for the Indigo 12000, ousting Xerox as preferred supplier in what HP Indigo called “its biggest ever competitive win”.

Shutterfly has also invested heavily in Scodix for a number of locations across the US. In all there 12 manufacturing sites, boosted by the acquisition of Lifetouch, the leading schools’ photographic company in the US last year.

This gave the business the scale to go after commercial digital printing through Shutterfly Business Solutions, generating revenue of £225 million from this extension. The company has the capacity to print 300 million direct mail pieces and 17 million personalised books.

It has also expanded the consumer product range into personalised gifts and home decor using a network of external suppliers where it cannot fulfil orders internally. It needs the expansion. The photo product sector in the US has become commoditised with multiple small players despite the huge market. It resulted in a Q1 loss of $83.6 million.

By Gareth Ward

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Indigo users unite

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Shutterfly is being bought by Apollo Global Management which plans to add the Snapfish business on completion of the deal to form the largest photo products business in the US. Apollo Global Management was at one time last year linked to a possible buy out of Xerox.

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