What's going on?
Private equity firm Apollo Global announced late on Monday it’d buy photo services Snapfish and Shutterfly, paying $3 billion for the latter – but Shutterfly’s stock didn’t get in a flap on Tuesday…
What does this mean?
Instagram, Snapchat – even currently for-sale Tumblr – probably rank ahead of Snapfish and Shutterfly in most consumers’ minds when it comes to photo platforms. But both have been around since 1999, selling picture storage, sharing, and printing services. Competition from stores like Target and Boots (which can offer cheap photo printing as their locations are already paid for) has fried ‘Fish and swatted ‘Fly, however. In February, Shutterfly began a strategic review of its business, which included exploring a sale.
Apollo now wants to combine both companies, likely picturing a future where the photo personalization pioneers go toe-to-toe with on- and offline rivals.
Why should I care?
For markets: A photo finish for Shutterfly’s shares.
Apollo’s paying Shutterfly’s investors $51 per share of the company – roughly the market price, which explains why investors didn’t rush to buy the stock as they typically do when a takeover’s announced. The deal price is, however, a premium to Shutterfly’s stock price back in April. That’s when investors first got wind of a potential acquisition and accurately predicted the offer Apollo would eventually make. For investors who missed out, it’s possible Shutterfly will be public again in the future: private equity firms eventually sell on businesses they’ve turned around to bag their investors a profit.
Zooming out: A picture’s worth $500 million words.
Consumer goods giant Unilever this week announced the purchase of luxury skincare brand Tatcha for a reported $500 million. The growth of photo taking (over a trillion last year) and sharing shows little sign of slowing, perhaps benefiting Unilever as customers spend more on looking their best. That said, rival Nestlé’s going the other way, recently announcing plans to sell its skincare unit.