NEW YORK (The Deal) -- Private equity firm Silver Lake Partners is expected to win bidding for online photography company Shutterfly (SFLY) , in a deal valued in the $2 billion range, one source said.
If and when the deal is agreed to, which sources indicated is still not certain, even with final bids in, the Menlo Park, Calif., private equity firm will face a challenge of turning around a money-loser. On July 30, the company reported a net loss of $27.1 million, an increase from an $11.8 million loss over the previous 12-month period.
The pending sale to Silver Lake, reported first by Reuters, represents the latest in what is expected to be a series of M&A transactions in which private equity firms are expected to pursue online photo assets. The private equity firm is investing from a $10.3 billion fund it raised in 2013 - its fourth, and the same one it used to take Dell private last year.
Initial bidders for Redwood City, Calif.-based Shutterfly included about a dozen interested parties, many of them financial sponsors, said one source. The second round - of which The Deal reported mid-August - included almost exclusively financial sponsors.
While the company's primary bailiwick is photo storage, Shutterfly also offers book, card and gift options to customers.
One source said the company's sale process began in July, and several reports stated the investment bank run by Frank Qattrone, Qatalyst Partners, is representing Shutterfly in a sale.
Qatalyst did not respond to requests seeking comment.
In the past few years, Shutterfly has built out offerings with a series of M&A transactions: it bought a digital trove of Kodak Gallery images in 2012 from Eastman Kodak in a bankruptcy auction for $23.8 million.
In 2011, Shutterfly bought cards and stationery maker Tiny Prints for $141 million. In 2012, Shutterfly also bought PhotoccinoLtd., which analyzes and ranks digital images, reportedly for $20 million.
Last year, Shutterfly inked deals for ThisLife, which stores and shares photos; BorrowLenses, which rents out photo and video equipment; and R and R Images, also a stationery company; as well as MyPublisher, an online photo book software company. Shutterfly did not disclose terms of the deals.
A second source said it is likely PE bidders will also attempt to buy Hewlett-Packard (HP) 's Snapfish, a similar service, which, according to prior reports, may also be sold off.
In 2012, Hellman & Friedman sold its Getty Images to the Carlyle Group (CG) in a $3.3 billion deal.
Silver Lake and Shutterfly declined to comment. Hewlett-Packard did not immediately return a request for comment.