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Shutterfly Open To Transactions Offering 'Compelling Value'


Online photography company Shutterfly, Inc. (NASDAQ: SFLY) will continue to explore and consider acquisition offers that could provide "compelling value," The Wall Street Journal reported on Wednesday.

Shutterfly is in the middle of an activist battle and proxy fight with Marathon Partners Equity Management. The activist firm owns a 5.4 percent stake and said earlier this year it is "increasingly frustrated" with the firm's executive compensation plan, capital allocation and M&A strategy.

Shares were more more than 1 percent at $46.52 on Thursday.

Shutterfly's comments stem from a letter sent to shareholders on Wednesday. In the letter, the company stated it reached out to more than 25 potential buyers to explore a sale of the company last year. The Board of Directors ultimately concluded that not one of the proposals it received "would have resulted in a meaningful premium to the trading price of Shutterfly shares at the time."

As such, the company removed itself from the selling block and shifted focus to the "critical" 2014 holiday period which generates a "substantial" portion of the company's annual revenues.

Shutterfly Defends Its Performance

Marathon Partners is seeking to replace all three Class III members of Shutterfly's Board, including the company's President and Chief Executive Officer, Jeffrey T. Housenbold.

"Shutterfly has made tremendous strides both operationally and financially since its IPO in 2006," the company noted in its letter. "Over that timeframe, the Shutterfly management team, under Mr. Housenbold's leadership, has successfully balanced top-line and bottom-line expansion. Since its IPO, the Company has grown revenue and adjusted EBITDA at a compound annual growth rate of approximately 30% and free cash flow at a compound annual growth rate of more than 74% throughout both up and down economic cycles, including one of the deepest recessions in U.S. history."

Shutterfly also noted it invited Marathon Partners' Managing Member Mario D. Cibelli to join the Board of Directors in an attempt to avoid a costly and disruptive contest. Despite the fact that Cibelli declined the invitation, Shutterfly stated it remains open to continued engagement with Marathon Partners and all stockholders to discuss opportunities to create, and sustain long-term stockholder value.


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Posted-In: Activist Investing Jeffrey T. Housenbold Marathon Partners Equity Management Mario Cibelli shutterfly Wall Street JournalNews Media

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