On Tuesday, Shutterfly announced that they have purchased Lifetouch, a Minnesota-based photography company that specializes in school portraits. Shutterfly reportedly bought the privately owned company for $825 million.
Lifetouch was founded in 1936 as National School Studios. Founders Bruce Reinecker and Eldon Rothgeb journeyed to one-room schoolhouses in Minnesota to take class portraits. The company grew rapidly over the next few years and became the largest school photography company in the United States. Before his death in 1987, Reinecker surrendered ownership of the company to his employees.
In 1984, the company changed its name from National School Studios to Lifetouch. In 1994, they began opening fashion photography studios in malls and later transitioned to taking photos of church members after they acquired United Church Directories in 1995. Over the years, Lifetouch has purchased many large photography studios like Olan Mills and CPI Corporation.
Shutterfly’s purchase of Lifetouch is part of a new effort to expand into school photography. Lifetouch reportedly earned more than $900 million during their last fiscal year and photographed over 20 million students. The sale will be finalized later in the year, but Shutterfly states that they plan to keep the two companies separate for now.
After the deal was announced on Tuesday, Shutterfly’s stock soared in after hours trading. Shares continued to rise on Wednesday, increasing by 28%. The same day, Shutterfly announced larger than expected earnings for their fourth quarter. This caused the stock to leap even higher, hovering around 72.00 on Thursday. This continues the stock’s trend of upward mobility for the year; the company’s stock has risen more than 39% in the past year.
As a result of the sale, Shutterfly’s earnings are now projected to double by 2020 and their yearly earnings are expected to top $1.22 billion. Post-sale, Shutterfly reportedly has earnings before interest, taxes, depreciation and amortization (EBITDA) of $450 million.