Shutterfly Inc. (SFLY), which turns digital photos into printed albums, is working with boutique investment bank Qatalyst Partners LLC to find buyers for the company, according to people familiar with the matter.
Preparations are at an early stage and may not lead to a transaction, the people said, asking not to be identified discussing a private matter. Potential acquirers include private-equity firms as well as e-commerce and Web storage companies, they said.
Shutterfly is seeking a buyer as large Internet and technology companies including Google Inc. (GOOGL) and Facebook Inc. (FB) have begun to put cash reserves to work - driving $70 billion of takeovers of U.S. technology and Internet companies this year, data compiled by Bloomberg show. Facebook, which acquired WhatsApp Inc. for $18 billion earlier this year, today said it would buy LiveRail, a startup that helps business buy more relevant video advertisements.
Shutterfly allows customers to print photos onto items like mugs, pillows, and iPad cases. It has acquired companies such as Tiny Prints and Wedding Paper Divas to round out a portfolio of stationery, greeting cards and invitations. It also acquired Kodak Gallery from Eastman Kodak Co., in 2012.
Shutterfly competes with Hewlett-Packard Co.’s Snapfish as well as retailers including CVS Caremark Corp. Founded in 1999, its early backers included Netscape Communications Corp.’s co-founder Jim Clark.
The company has been boosting sales at the expense of profit. First-quarter revenue climbed 17 percent to $137.1 million from a year earlier, while the net loss widened to $34.2 million from $12.4 million. This year, the company may post the first annual net loss since its 2006 initial public offering, according to estimates compiled by Bloomberg.
Shutterfly’s shares jumped as much as 17 percent, and were at $50.39 each as of 3 p.m. in New York today, giving the Redwood City, California-based company a market value of about $1.9 billion. Through yesterday, the shares had declined 24 percent in the past year.
A spokeswoman for Shutterfly declined to comment, while a spokeswoman for Qatalyst, the investment bank started by Frank Quattrone, didn’t reply to messages seeking comment.
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