CafePress shares spiked Friday morning after the troubled e-commerce retailer announced that it had agreed to be acquired for more than $25 million by a subsidiary of San Francisco-based photo storage and printing company Snapfish.
In a joint news release, the companies said that their merger, at least in part, is about scale: “The transaction, once closed, would enable Snapfish to access over one billion content items.”
In filings with the U.S. Securities and Exchange Commission, Louisville-based CafePress said it would sell each of its roughly 17 million outstanding shares to Snapfish for $1.48 a share, totaling more than $25 million.
CafePress, which sells customized mugs, T-shirts and other gifts, has been struggling to generate a profit. The company lost $26.5 million in 2016 and $10.3 million last year. The e-commerce retailer reduced its staff this year as a step to cut costs, but profitability has remained elusive. Last month, CafePress reported a $1.4 million second-quarter loss, though shares spiked as CEO Fred Durham said that web traffic was improving.
For months, the company has struggled with lower web traffic because of an aging website and because Google updated its search algorithm, which has resulted in Google searches relegating links to CafePress to the middle of the pack.
Snapfish prints customers’ photos on mugs, in photo books and other items. It is privately held and does not disclose financial information.
Durham said in Friday’s release that the acquisition of CafePress represents “a critical turning point” and an “opportunity to accelerate growth.”
The companies said that beyond scale, the deal would provide Snapfish with “a massive array of designs” and “major entertainment properties,” while CafePress would “have access to additional manufacturing, marketing and merchandising capabilities.”
Snapfish told Insider via email that it would not provide any additional comments on the deal, and CafePress could not be reached to talk about how the transaction might affect local employment and operations.
The company in summer 2016 unveiled its new $2.5 million, 25,000-square-foot world headquarters in Middletown.
CafePress’ shares closed on Thursday at $1.29 but spiked to $1.52, up 18 percent, with the opening bell on Friday. However, 15 minutes later, the price had settled near the agreed upon transaction price. Shortly after 11:30 a.m., shares were trading for $1.45, up 12.4 percent from Thursday’s close.
Trading was heavy: Before 11 a.m., more than 1 million shares had changed hands, more than 60 times the average daily volume.
Snapfish is owned by Beltsville, Md.-based digital imaging services company District Photo, which originally bought Snapfish in 2001. District Photo sold it to Hewlett-Packard in 2005 for $300 million but reacquired it for an undisclosed sum in 2015.
The companies said that they expect the deal, which has been approved by both boards, to close in early November.