Shutterfly, Inc. Agrees to be Acquired by Certain Funds Managed by Affiliates of Apollo Global Management in an All-Cash Transaction with an Enterprise Value of $2.7 Billion

Shutterfly, Inc. stockholders to receive $51.00 per share in cash

REDWOOD CITY, Calif.–(BUSINESS WIRE)–Shutterfly, Inc. (Nasdaq: SFLY) (“Shutterfly” or the “Company”), a
leading retailer and manufacturing platform dedicated to helping
capture, preserve, and share life’s important moments, today announced
that it has entered into a definitive agreement with affiliates of
certain funds (the “Apollo Funds”) managed by affiliates of Apollo
Global Management, LLC (together with its consolidated subsidiaries,
“Apollo”) (NYSE: APO), a leading global alternative investment manager,
pursuant to which the Apollo Funds will acquire all the outstanding
shares of Shutterfly for $51.00 per share in cash, or enterprise value
of approximately $2.7 billion.

The $51.00 per share cash consideration represents a premium of 31% when
compared to Shutterfly’s unaffected closing stock price of $38.91 on
April 23, 2019, the last trading day before a media report was published
speculating that Apollo Funds were considering a bid for the Company.
The Shutterfly Board of Directors unanimously approved the agreement
with the Apollo Funds and recommends that Shutterfly stockholders vote
in favor of the transaction.

“Earlier this year, Shutterfly announced the formation of a Strategic
Review Committee to continue the Board of Directors’ ongoing review of
strategic alternatives for the Company,” said William Lansing,
Shutterfly’s Chairman of the Board. “We ran a broad and comprehensive
process, engaging with a significant number of potential buyers, and are
pleased that the process culminated in a transaction that maximizes
value for Shutterfly stockholders. We look forward to working closely
with Apollo as we continue to build a compelling service that enables
deeper, more personal relationships for our customers, and to advance
our digital and manufacturing capabilities to support sustainable
growth.”

“Shutterfly has cultivated a deep connection with customers through its
three divisions, Shutterfly Consumer, Shutterfly Business Solutions and
Lifetouch, each of which we view as exceptional platforms with leading
positions in their respective segments,” said David Sambur, Senior
Partner at Apollo. “At a time when billions of photos are taken every
day, Shutterfly has led the charge as a pioneer of personalized photo
products and school photography, helping consumers capture, preserve and
share life’s most important moments. We are excited to work with
Shutterfly’s leadership and talented team of dedicated employees to grow
each of the businesses and further enhance customer relationships across
both Shutterfly and Lifetouch.”

Lansing continued, “This transaction is a testament to our outstanding
team of talented employees and the company they have built. What began
as a digital photo printing company is now a large and diversified
business that has successfully evolved with our customers. As we enter
this exciting new chapter for Shutterfly, Apollo is an ideal strategic
partner, as they will provide additional resources and industry
knowledge while we continue to work on our important business
initiatives.”

In a separate press release issued today, Shutterfly announced the
appointment of Ryan O’Hara as its President and Chief Executive Officer,
effective June 24, 2019.

Transaction Details

The transaction is expected to close by early fourth quarter 2019. The
transaction is subject to customary closing conditions, including
approval by Shutterfly stockholders and receipt of clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Upon completion of the transaction, Shutterfly will become a privately
held company, and its shares will no longer be listed on the NASDAQ
Global Select Market.

Advisors and Financing Providers

Morgan Stanley & Co. LLC is acting as financial advisor to Shutterfly,
and Fenwick & West LLP is acting as its legal counsel.

Financing is being provided by Barclays, Citi and SunTrust Robinson
Humphrey, Inc. (or a lending affiliate), who are also serving as
financial advisors to the Apollo Funds. LionTree, UBS Investment Bank
and Evercore are also serving as financial advisors to the Apollo Funds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel
to the Apollo Funds.

About Shutterfly

Shutterfly, Inc. is a leading retailer and manufacturing platform for
personalized products and communications. Founded in 1999, Shutterfly,
Inc. has three divisions: Shutterfly Consumer, Lifetouch, and Shutterfly
Business Solutions. Shutterfly Consumer and Lifetouch help consumers
capture, preserve, and share life’s important moments through
professional and personal photography, and personalized products. The
Shutterfly brand brings photos to life in photo books, gifts, home
décor, and cards and stationery. Lifetouch is the national leader in
school photography, built on the enduring tradition of “Picture Day”,
and also serves families through portrait studios and other
partnerships. Shutterfly Business Solutions delivers digital printing
services that enable efficient and effective customer engagement through
personalized communications. For more information about Shutterfly, Inc.
(Nasdaq: SFLY), visit www.shutterflyinc.com.

About Apollo

Apollo is a leading global alternative investment manager with offices
in New York, Los Angeles, San Diego, Houston, Bethesda, London,
Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong,
Shanghai and Tokyo. Apollo had assets under management of approximately
$303 billion as of March 31, 2019 in private equity, credit and real
assets funds invested across a core group of nine industries where
Apollo has considerable knowledge and resources. For more information
about Apollo, please visit www.apollo.com.

Additional Information and Where to Find It

In connection with the proposed transaction, Shutterfly will file
relevant materials with the SEC, including a preliminary and definitive
proxy statement. Promptly after filing the definitive proxy statement,
Shutterfly will mail the definitive proxy statement and a proxy card to
the stockholders of Shutterfly. SHUTTERFLY STOCKHOLDERS ARE URGED TO
READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING
ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED
TRANSACTION BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION.
Stockholders of Shutterfly will be able to obtain a free copy of these
documents, when they become available, at the website maintained by the
SEC at www.sec.gov
or free of charge at www.shutterflyinc.com.

Additionally, Shutterfly will file other relevant materials in
connection with the proposed acquisition of Shutterfly by the Apollo
Funds pursuant to the terms of an Agreement and Plan of Merger by and
among, the Apollo Funds and Shutterfly. Shutterfly and its directors,
executive officers and other members of its management and employees,
under SEC rules, may be deemed to be participants in the solicitation of
proxies of Shutterfly stockholders in connection with the proposed
transaction. Information concerning the interests of Shutterfly’s
participants in the solicitation, which may, in some cases, be different
than those of Shutterfly’s stockholders generally, are available in
Shutterfly’s proxy statement for its 2019 annual meeting of
stockholders, which was filed with the SEC on April 8, 2019. To the
extent holdings of securities by Shutterfly’s directors or executive
officers have changed since the amounts disclosed in its proxy
statement, such changes have been or will be reflected on Statements of
Change in Ownership on Form 4 filed with the SEC. Additional information
regarding these persons and their interests in the proposed transaction
will be set forth in the definitive proxy statement relating to the
proposed transaction when it becomes available. These documents are
available free of charge at the SEC’s web site at www.sec.gov
or by going to Shutterfly’s website at www.shutterflyinc.com.

Forward-Looking Statements

This media release contains “forward-looking” statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. If such risks or uncertainties
materialize, the results of Shutterfly could differ materially from
those expressed or implied by such forward-looking statements. You can
identify these statements by the use of terminology such as “believe”,
“expect”, “will”, “should”, “could”, “estimate”, “anticipate” or similar
forward-looking terms. All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements, including any statements regarding the expected timing of
the completion of the transaction; the ability of the Apollo Funds and
Shutterfly to complete the proposed transaction considering the various
conditions to the transaction, some of which are outside the parties’
control, including those conditions related to regulatory approvals; the
expected benefits and costs of the proposed transaction contemplated by
this document; the expectation that Shutterfly will further enhance its
customer relationships and digital and manufacturing capabilities; the
belief that the agreement maximizes Shutterfly’s value for its
stockholders; any statements concerning the expected development,
performance, market share or competitive performance relating to
Shutterfly’s products or services; any statements regarding Shutterfly’s
foundation of strong assets, the quality of its employees or its
business strategy with respect to each of its three business segments;
any statements regarding Apollo’s future intention with Shutterfly; any
statements of expectation or belief; and any statements of assumptions
underlying any of the foregoing. Risks, uncertainties and assumptions
include, but are not limited to, the failure to satisfy any of the
conditions to the consummation of the proposed transaction, including
the approval of the merger agreement by Shutterfly stockholders and the
receipt of certain governmental and regulatory approvals; the occurrence
of any event, change or other circumstance that could give rise to the
termination of the merger agreement; the effect of the announcement or
pendency of the proposed transaction on Shutterfly’s business
relationships, operating results and business generally; risks that the
proposed transaction disrupts current plans and operations and the
potential difficulties in employee retention as a result of the proposed
transaction; risks related to diverting management’s attention from
Shutterfly’s ongoing business operations; the outcome of any legal
proceedings that may be instituted against Shutterfly related to the
merger agreement or the proposed transaction; unexpected costs, charges
or expenses resulting from the proposed transaction; the effect of any
negative changes in general economic conditions; and other risks that
are described in the SEC reports of Shutterfly, including but not
limited to the risks described in Shutterfly’s Annual Report on Form
10-K for its fiscal year ended December 31, 2018 and subsequent
quarterly reports on Form 10-Q, and that are otherwise described or
updated from time to time in other filings with the SEC. The Apollo
Funds and Shutterfly assume no obligation and do not intend to update
these forward-looking statements.

Contacts

For Shutterfly
Investor Relations:
Shawn Tabak
650-610-6026
[email protected]

Media
Relations:

Sondra Harding
650-610-5129
[email protected]

For
investor inquiries regarding Apollo Global Management:

Gary M.
Stein
Head of Corporate Communications
Apollo Global
Management, LLC
212-822-0467
[email protected]

Ann
Dai
Investor Relations Manager
Apollo Global Management, LLC
212-822-0678
[email protected]

For
media inquiries regarding Apollo Global Management:

Charles
Zehren
Rubenstein Associates, Inc. for Apollo Global Management, LLC
212-843-8590
[email protected]

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