Silver Lake Management LLC has shelved an attempt to acquire and combine photo-sharing sites Shutterfly Inc. and Snapfish, after it failed to reach a deal by yesterday’s deadline, a person with knowledge of the matter said.
Silver Lake, the biggest technology-focused buyout firm, decided against buying Snapfish from Hewlett-Packard Co. after performing due diligence, the person said, asking not to be identified because the information is private.
While the private-equity firm also decided not to pursue a deal with Shutterfly by the company’s deadline, Silver Lake is still open to returning to talks, the person said.
Shutterfly fell 2.5 percent to $46.96 a share in New York yesterday, giving it a market value of $1.81 billion. The shares dropped another 6.8 percent after the close of regular trading. Snapfish was acquired by HP for an undisclosed amount in 2005.
Silver Lake was valuing Shutterfly at about 12 times its future earnings before interest, taxes, depreciation and amortization, another person said. That implies a purchase price of about $2.57 billion, based on estimates for 2015 Ebitda of $214 million, according to data compiled by Bloomberg.
Combining the two digital-photo storage and printing sites would have boosted their scale and product offerings to customers looking to print photos onto items like mugs, pillows, and iPad cases. It would also remove a competitor in an industry that’s facing competition ranging from startups to drugstores to greeting-card company American Greetings Corp.
Sarah Pompei, a spokeswoman for Hewlett-Packard, declined to comment. Gretchen Sloan, a spokeswoman for Shutterfly, didn’t return a call seeking comment.
While Shutterfly is growing revenue, it is doing so at the expense of profits. Even as they forecast a 17 percent rise in sales, analysts expect Shutterfly to report its first annual loss since it became a publicly traded company this year, data compiled by Bloomberg show
The deal would have been Silver Lake’s largest acquisition since last year’s buyout of Dell Inc. with Michael Dell, according to data compiled by Bloomberg. Working with boutique investment bank Qatalyst Partners LLC, Shutterfly drew interest from private-equity firms including Hellman & Friedman LLC, people with knowledge of the matter have said.
Founded in 1999, Shutterfly has since 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.
Its early backers included Netscape Communications Corp.’s co-founder Jim Clark.
HP’s Chief Executive Officer Meg Whitman said this week she’s splitting the company in two: one business that sells personal computers and printers, with a separate entity providing software, servers, storage and services.