Shutterfly Completes Lifetouch Acquisition For $825 Million
Zacks Investment Research | Apr 03, 2018 05:12AM ET
Shutterfly, Inc. (NASDAQ:SFLY) announced that it has closed the buyout of Lifetouch, the national leader in school pictures, for $825 million.
Notably, over the past year, the company returned 63.8%, outperforming its broader industry ’s gain of 46.8%.
Deal Details
The acquisition, announced on Jan 30, 2018, was financed with incremental term loans and closed simultaneously with the merger deal.
On closing of the acquisition, Lifetouch will no longer be required to fund the Lifetouch Inc. Employee Stock Ownership Plan (ESOP). Sales proceeds were paid to the trustee of the ESOP, who will distribute the proceeds to participants. The participants are slated to receive full payment for their ESOP interest in two installments.
On acquisition, Michael Meek will remain as the President and CEO of Lifetouch but will report to Christopher North, the President and CEO of Shutterfly.
Why Is Shutterfly Optimistic About the Acquisition?
Shutterfly believes that the merger will effectively help the company gain access to many Lifetouch customers and expand its base. With the acceleration of Lifetouch’s online platform, Shutterfly aims to realize significant supply chain and manufacturing synergies over time.
Moreover, Shutterfly expects the acquisition to result in roughly $935 million of additional net revenues and approximately $100 million of additional adjusted EBITDA in the year following closing of the acquisition.
Our Take
The year 2017 has been a transition year for Shutterfly, with different brands transitioning at different times. Structural changes forced the company to incur higher costs and kept its yearly margin under pressure. In 2017, restructuring charges were $15.5 million.
Now, the latest acquisition will effectively help Shutterfly to drive revenues and margins. Shutterfly can significantly expand its customer base and boost consumer segment revenues after the merger.
Zacks Rank & Stocks to Consider
Shutterfly carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same space include TheStreet, Inc. (NASDAQ:TST) , Brightcove Inc. (NASDAQ:BCOV) and RELX PLC (NYSE:RELX) . While TheStreet flaunts a Zacks Rank #1 (Strong Buy), Brightcove and RELX carry a Zacks Rank #2 (Buy). You can see .
While TheStreet’s earnings for 2019 are projected to grow 100%, Brightcove and RELX’s earnings for 2018 are estimated to grow 96.2% and 2.9%, respectively.
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