Analysis: Gauging the impact of the new Shutterfly-Snapfish merger deal

The breaking news this week wasn’t that Apollo Global Management announced $2.7 billion all-cash deal to acquire Shutterfly Inc.; that had been telegraphed for some time. Shutterfly’s board had set up an exploratory committee to make this happen (although it wasn’t the first time). Nor was it the announcement the company found a new president and CEO in Ryan O’Hara, an experienced executive. Again, current president Christopher North had already announced his plans to relocate back to England. No surprise there.

The announcement sending shockwaves through the industry was the addition of Snapfish as part of the deal. In a separate but related transaction, Apollo Funds announced into a definitive agreement to combine Snapfish with Shutterfly. Upon the closing of the Snapfish transaction, Snapfish’s owner, District Photo Inc., “will become significant minority owners in the combined Shutterfly and Snapfish business.”

“The Apollo Funds bring substantial financial resources as we continue to invest in innovation, as well as valuable strategic perspectives to drive growth over the coming years,” says Neil Cohen, chairman of Snapfish and CEO of District Photo, in a press release. “We are committed to supporting the company and continuing our relationship as a fulfillment partner.”

This is the second time District Photo has sold Snapfish. Launched in 1999 as part of the first wave of online photo-printing companies — along with Ofoto (later Kodak…