Photobox Group, the online photography service, is in talks to merge with a European rival in a bid to create a Continental giant in personalised gifting products.

Sky News has learnt that Photobox and Albelli, a Dutch-based company, are in advanced talks about a tie-up that would create a business worth in the region of £500m.

The deal is understood to be close to being finalised, although it could yet fall apart.

If completed, it would combine Photobox, which is owned by Exponent Private Equity, and Gilde Buy Out Partners-backed Albumprinter Holding, which is known as Albelli.

Details of the transaction, including the respective valuations of the two companies, were unclear on Friday.

Technology industry sources said it would create a major pan-European player in the fast-growing area of bespoke online photography and gifting services.

Albelli owns Bonusprint, which has a presence in markets including Belgium, France, Norway and the UK.

Photobox previously owned Moonpig, which successfully floated in London this year – one of a number of e-commerce businesses which have gone public after seeing sales surge during the pandemic.

It also trades in France, Germany and Spain.

A spokesman for Exponent declined to comment.

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