The deal values the online retailer at about $1.74 billion, based on the company’s outstanding shares at the end of March. Apollo will also assume Shutterfly’s more than $1 billion in debt.

The buyout firm plans to merge Shutterfly with rival Snapfish, whose owners will become minority shareholders in the combined business, Apollo said.

The offer for Shutterfly represents a 31% premium to its closing share price of $38.91 on April 23, a day before Bloomberg News reported that the Redwood City, Calif.-based company had drawn interest from suitors including Apollo. Shutterfly’s board unanimously approved the deal and has recommended that shareholders vote in favor of the transaction.

The deals are expected to close in the fourth quarter.

“Shutterfly has cultivated a deep connection with customers,” Apollo Senior Partner David Sambur said in a statement. “At a time when billions of photos are taken every day, Shutterfly has led the charge as a pioneer of personalized photo products and school photography.”

Shutterfly, which sells personalized frames and photo albums online, announced in February that it had retained an adviser to review strategic alternatives after receiving interest from potential buyers.

Shutterfly closed up 2.7% to $50.25 Monday, giving the company a market value of about $1.7 billion. Its shares have fallen about 48% in the past year.

LionTree Advisors is advising Apollo on the deal. Barclays, Citigroup, and SunTrust Banks are providing financing for the transaction and also serving as financial advisers to Apollo. Apollo is getting legal counsel from Paul, Weiss, Rifkand, Wharton & Garrison.

Morgan Stanley acted as Shutterfly’s financial adviser while Fenwick & West is its legal adviser.