PhotoBox Announces £120m Merger with

PhotoBox, Europe’s leading online digital photo service, and, UK’s number one online greetings card retailer have completed their merger (the “Merger”), valuing at £120m. The combination brings together two profitable and strong European online brands and creates one of Europe’s largest online providers in the fast growing market for personal publishing (the “Enlarged Group”).

Rationale for the Merger

Both PhotoBox and have succeeded in building enviable reputations for great service and innovative products in the photo printing and single card markets. PhotoBox and will continue to operate as separate brands addressing their respective markets. However, the Enlarged Group expects to leverage increased scale and the complementary customer bases to deliver accelerated growth. In addition, the geographic presence and product offerings of both businesses create a strong platform from which to pursue new and emerging opportunities in the web-to-print market.

 Operating in a European online photography market estimated to be worth more than €1.0 billion per annum, the PhotoBox team processed more than 1 million individual photo prints each day in 2010 for its 11 million members, as well as creating and shipping over 100,000 canvas prints and 1 million photobooks across Europe. PhotoBox turnover was €80m (£72m) in 2010.

Similarly, the single card market in the UK –’s core market – is estimated to be worth in excess of £1.0 billion per annum, of which only an estimated 4 per cent is currently fulfilled online. As the leader in this segment, shipped in excess of 12 million cards to nearly three million customers in the past 12 months. Moonpig turnover was £38m in its fiscal year ending April 2011.

 Terms of the Merger

The total consideration payable by PhotoBox for is £120 million. This will be satisfied by existing shareholders in rolling over a portion of their respective shareholdings in to the share capital of the Enlarged Group, bank lending and new equity. The new equity will be raised from a combination of existing shareholders – Highland Capital Partners, Index Ventures and Harbourvest – and a group of new private equity investors led by Insight Ventures alongside Quilvest Ventures and Greenspring Associates. Barclays Bank PLC and Royal Bank of Scotland are providing the senior credit facility.

The senior management teams of both businesses remain with the Enlarged Group, post-merger, with Stan Laurent serving as Group President & Chief Executive Officer and Iain Martin serving as Managing Director. Founder and Executive Chairman, Nick Jenkins will serve as an advisor to the Enlarged Group’s Board of Directors.

 Insight Venture’s Lawrence Handen will also join the Group Board of Directors, as will Lionel Bergeron (Quilvest Ventures) and Ashton Newhall (Greenspring Associates) as Board observers.

 Commenting on the transaction Stan Laurent said:

“It’s great to see two high-growth, profitable and ambitious European online brands come together to leverage each other’s strengths and create a global market leader. I’m excited to welcome the Moonpig team and to expand on its creativity to continue offering Moonpig customers a unique service. Given the opportunities in the personal publishing market, I’m delighted to have the support of such strong financial partners who share our vision and have strong track records in supporting successful, online businesses.”

 Also commenting Founder and Chairman of, Nick Jenkins said:

“Everyone at Moonpig has thoroughly enjoyed building Moonpig into a household brand. Every morning the equivalent of a Premier League football stadium full of people get a Moonpig card and they love them. We now want to build on that success. The explosion in digital photography over the past few years has been evident in the number of our customers using their own photographs to great and often hilarious effect in our cards. Stan and I both believe that we can now offer a much wider range of photographic products to our customers while adding our own Moonpig creativity. We can also take our core greeting card product to countries which would be difficult to access as a standalone business.

 “As a long standing customer of Photobox I know that the Photobox team shares our passion for great service. This deal is very good news for both teams and all of our customers.”

 Commenting on behalf of Insight Ventures, Lawrence Handen added:

“There is a clear opportunity for Photobox and and we are proud to be a part of their combined future. We share the management team’s vision for the next phase of personalised publishing, particularly its delivery through online channels, and support management’s pursuit of innovation, leadership and international growth.”

PhotoBox was advised by Lazard and was advised by Ingenious Corporate Finance on the transaction

Tony Zappalaphotobox