California-based Shutterfly, the big online retailer and manufacturer of personalized photography and related products and services, plans to pay $825 million in cash to buy Eden Prairie-based Lifetouch, an employee-owned company and a leader in school photography.

"We're focused on growing both these businesses," Shutterfly CEO Chris North said during a visit to Eden Prairie Tuesday. "We're just now bringing the two teams together. We're going to bring Shutterfly products to Lifetouch, as well as our cloud-based management system."

Lifetouch, with about 10 million customers, creates growth opportunities for Shutterfly's online photobook and photo-organization system.

Lifetouch essentially had put itself up for sale in recent months, said its CEO, Michael Meek. He said it wasn't growing fast enough to generate sufficient cash flow to invest in new technology and in other ways in the business, while cashing out some of its 16,000 employee and former employee owners as they reach retirement age and are eligible to sell their stock back to the company.

"Growth has slowed," said Meek, 55, who will remain with the combined company. "We had to make investments. That put pressure on us. To accelerate growth we needed to consider a new [ownership] structure."

Meek said the company needed to move beyond paper and develop a better digital platform. "We've done some on our own. This will accelerate that vision … and let us provide a world-class portfolio of products," he said.

The $825 million price approximates the value of the company assigned by an independent business evaluator who estimates the worth of Lifetouch every year on behalf of the independent trustee for the Employee Stock Ownership Plan, Meek said. Those owners will be able to convert their ownership to other types of qualified retirement plans, such as IRAs or to a 401(k).

In the fiscal year ended June 30, 2017, Lifetouch had an operating loss of $3.9 million on revenue of $964 million. It posted earnings before interest, taxes, depreciation and a $72.6 million ESOP contribution of $111.3 million.

Lifetouch, an ESOP for more than 40 years, is Minnesota's largest employee-owned company and one of the largest in the United States.

Shutterfly operates a manufacturing plant in Shakopee. North, 47, and Meeks said the companies employ about 1,000 employees between them. There are no imminent plans for layoffs.

"We have complementary businesses," North said. "Lifetouch is expert at photography and we provide online tools. Each company will operate separately to serve their customers, but each company has things the other can use."

Shutterfly expects Lifetouch to add about $100 million in earnings before interest, taxes and depreciation during the first 12 months following consummation of the transaction, and revenue of about $935 million. The companies expect the deal to close in the second quarter, pending regulatory approvals.

Shutterfly shares jumped 17 percent, to $63.90, in after-hours trading Tuesday after the company announced the Lifetouch deal and fourth-quarter earnings that easily beat estimates. The company reported adjusted fourth-quarter earnings of $3.11 per share; analysts had expected $2.88 per share.

For the year, Shutterfly said it earned $30.1 million on revenue of $1.19 billion compared with earnings of $15.9 million on revenue of $1.13 billion in 2016.