06/11/2019 | Press release | Distributed by Public on 06/11/2019 08:02
Shutterfly, Inc. (NASDAQ: SFLY) confirmed Monday it reached an agreement to sell itself to an affiliate of Apollo Global Management for $51 per share in cash. The deal represents a premium of 31 percent from Shutterfly's April 23 closing price - the last trading day before media reports of a potential M&A deal surfaced.
Raymond James' Aaron Kessler downgraded the stock from Outperform to Market Perform.
Shutterfly's acquisition of Lifetouch presented the company with synergy opportunities, and Apollo should be able to move quickly to further take advantage of the synergies, Yruma said in the Monday downgrade note.
Apollo simultaneously announced the acquisition of Snapfish, which could generate incremental 'meaningful' synergies over the longer-term, the analyst said.
Shutterfly was transparent throughout a strategic review process that was confirmed in early February, Yruma said, adding that the likelihood of a competing bid challenging the announced deal is low.
The $51 per share price tag on the deal is 'reasonable,' as it represents a multiple of 8.1 times LTM EBITDA, the analyst said. On a dollar basis, Apollo is paying an enterprise value of $2.7 billion, which seems 'relatively inexpensive,' he said.
'Given that SFLY ran a public (and we believe complete process), we think the stock should move to the proposed deal price and downgrade to SW.'
Shutterfly's acquisition announcement was 'largely anticipated' given multiple media reports over the past few months, Kessler said in the Tuesday downgrade note.
The price tag on the deal could be seen as somewhat disappointing versus the research firm's prior $56 price target, and some media reports suggested a deal would take place in the high $50s, the analyst said.
The lower-than-expected acquisition price likely reflects uncertainty related to Shutterfly's core organic growth and synergy potentials from Lifetouch, he said.
Shutterfly shares were trading down by 0.28 percent to $50.11 in Tuesday's premarket session.