Scoops & Analysis

Thomas H. Lee approached Shutterfly with buyout proposal: Reuters

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Camera, Shutterfly
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Private equity firm Thomas H. Lee Partners LP has approached U.S. digital imaging company Shutterfly Inc (SFLY.O) with a preliminary acquisition proposal, people familiar with the matter said on Tuesday.

Earlier, Shutterfly disclosed that it had received “communications” directed to its board from a private equity firm indicating an interest in acquiring the company, without disclosing the identity of the buyout firm.

Shutterfly also said that a copy of a letter directed to its board by the private equity firm had been leaked. The sources disclosed the identity of Shutterfly’s suitor on condition of anonymity. Shutterfly declined to comment on it, as did Thomas H. Lee.

Shutterfly shares jumped as much as 10 percent on the news, and were trading up 7.7 percent at $44.08 in afternoon trading in New York, giving the company a market capitalization of about $1.5 billion.

“The board exercises its fiduciary duties in giving due consideration to such indications of interest, but is not engaged in negotiations regarding the sale of the company,” Shutterfly said in a filing with the U.S. Securities and Exchange Commission on Tuesday.

Founded in 1999, Redwood City, California-based Shutterfly allows customers to use their pictures for photo books, cards and gifts. Based in Boston, Thomas H. Lee has raised more than $20 billion of equity capital from investors since its founding in 1974.

Thomas H. Lee’s proposal is just the latest buyout approach that Shutterfly had received. In 2014, buyout firm Silver Lake Partners LP was in discussions to acquire Shutterfly and combine it with web-based photo sharing and photo printing service Snapfish, but could not reach a deal.

Shutterfly has also been targeted by several activist investors. Hedge fund Marathon Partners Equity Management LLC won two board seats in a proxy battle with the company last year. Another activist, Ancora Advisors, last year criticized Shutterfly over its corporate strategy, capital allocation and compensation policies.

Shutterfly announced in December that Chief Executive Jeffrey Housenbold would step down this month. Chairman Phil Marineau has taken over as interim CEO.

Earlier this month, Shutterfly said its 2015 net revenues increased 15 percent year-over-year to $1.06 billion, and that its adjusted earnings before interest, tax, depreciation and amortization reached $192 million, also a 15 percent increase year-over-year.

(Reporting by Greg Roumeliotis in New York; editing by Chizu Nomiyama and David Gregorio)

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