- Eastbay Asset ups stake in photo-sharing site to 5.4 percent
- `Hard to imagine a more opportune time' for strategic review
One of Shutterfly Inc.’s largest shareholders is agitating for a strategic review in light of an unsolicited offer the online photo-sharing site disclosed last week.
Eastbay Asset Management has increased its stake in Shutterfly to 5.4 percent and is urging Shutterfly’s board to put a search for a permanent chief executive officer on hold to consider what Eastbay calls a “highly credible takeover approach,” according to a regulatory filing on Monday.
“We find it hard to imagine a more opportune time to explore a strategic review,” Eastbay said in the filing. “An attractive unsolicited bid is on the table.”
Thomas H. Lee Partners is the firm that has approached Shutterfly, according to people familiar with the matter who requested anonymity because the information isn’t public.
The letter, coming from an investor with an increasing stake, ups the pressure on Redwood City, California-based Shutterfly to consider talks with its suitor. The company said on Feb. 23 that it received an expression of interest from a private equity firm it didn’t identify, and that it wasn’t negotiating a deal. Eastbay last reported a 4.4 percent holding in Shutterfly.
Shutterfly has held takeover talks before. Two years ago the photo-service provider was in discussions with Silver Lake Management, which wanted to acquire Shutterfly and combine it with Snapfish. Those talks fell apart and the stock tumbled. Shutterfly rose 0.5 percent to $44.44 at the close in New York Monday, trimming its loss over the past year to 7.4 percent.
Shutterfly said last week that it’s not currently in talks over a deal and is instead focused on its financial results while seeking to hire a new CEO. Jeffrey Housenbold stepped down from that role this month after 11 years.
Last year, Marathon Partners Equity Management, one of Shutterfly’s biggest shareholders, waged a proxy fight amid criticism of executive compensation, the company’s acquisition strategies and financial performance as well as prior efforts to sell the company.
Founded in 1999, Shutterfly 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. Its early backers included Netscape Communications Corp.’s co-founder Jim Clark.
Reuters first reported on Thomas H. Lee Partners being the one to approach Shutterfly with a buyout proposal.