Shutterfly will be bought for $51 a share in cash, a premium of about 1.5% to Shutterfly's closing price on Monday of $50.25. The stock was down 2.2% to $50.04 in premarket trading Tuesday.
"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. "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," he added.
Apollo also will buy Snapfish, which it plans to combine with Shutterfly to create a bigger player in online-photo services, according to The Wall Street Journal.
The acquisition of Snapfish, which like parent District Photo is closely held, would be contingent on the Shutterfly acquisition closing. District Photo would have a substantial minority stake in the combined company, a person familiar with the matter told the Journal.
Shutterfly also announced Monday it named Ryan O'Hara president and CEO, effective June 24. O'Hara served for more than four years as CEO of Move Inc.