Exponent and Electra snap up PhotoBox for £400m

PhotoBox, the venture-backed photo printing company, has agreed a sale to private equity firms Exponent and Electra for about £400m. The deal comes a year after the ecommerce company pulled back from plans for initial public offering with a reported valuation of up to £500m, blaming “volatile” markets.

PhotoBox, whose investors include Highland Capital Partners and Index Ventures, says it is Europe’s largest seller of personalised gifts such as photobooks. It bought gift card service Moonpig for £120m in 2011, and has made two large acquisitions in the past year, Spanish photobook seller Hofmann and German photo printer PosterXXL.

“The group has reached significant scale,” said Stan Laurent, chief executive. “Overall in Europe we’re almost two to three times any competitor.” Pro forma revenues were £275m last year, with its size allowing it to invest in marketing, product development and customer service. “It’s an environment where there’s zero tolerance from customers for poor service,” said Mr Laurent.

The acquisition values PhotoBox at more than 10 times its most recent earnings before interest, tax, depreciation and amortisation. Exponent and Electra are both mid-market investors based in London, with portfolios that include Big Bus Tours and TGI Fridays respectively. They will fund about half of the acquisition through debt secured on PhotoBox. The company’s existing management will also reinvest part of their proceeds from the sale in shares.

PhotoBox had sought to float in early 2014. That effort was “paused” after some other retailers — including white goods company AO World — saw falls in their share prices. PhotoBox’s underlying ebitda was £28.6m in the 12 months to April, a period before the purchase of PosterXXL

Mr Laurent said PhotoBox was likely to spend a year consolidating its two recent acquisitions “before considering further moves”. However, he said the company increasingly viewed itself as a “family of brands”, with growth beyond photo printing, in categories such as homeware. Ecommerce companies are seeking to reach consumers on their mobiles, a transition that requires simpler interfaces. Mr Laurent said that about half of Moonpig’s transactions were now made on mobile.

Tony Zappalaphotobox