US-based media company and stock photo provider Getty Images has agreed to acquire its competitor Shutterstock. The deal should result in a combined company worth about $3.7 billion, including debt financing, Bloomberg reports.
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Getty offers to pay about $28.85 in cash or about 13.67 Getty Images shares for each Shutterstock share. Shutterstock shareholders can also choose to pay in a mixed form - partly in cash and partly in Getty shares.
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It is expected that Getty Images will pay $331 million in cash and 319.4 million of its own shares for the transaction. Upon completion of the transaction, Getty Images owners will own about 54.7% of the combined company, and Shutterstock shareholders will own the rest.
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Getty Images CEO Craig Peters will hold the same position in the combined company.
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As of the close of the deal on Monday, Getty Images, which has about $1.4 billion in debt, has lost about 73% of its market value since going public in July 2022. Shutterstock fell by about 50% over the same time period.
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Following the news of their merger, Shutterstock shares jumped 44% in pre-market trading, while Getty's shares jumped 100%.
Why companies need it and what are the risks
The deal brings together two of the largest providers of licensed visual content in the US, as artificial intelligence upends the content creation market and mobile phone cameras reduce the value of stock photos.
The deal will combine Getty Images' vast library of photos, illustrations and videos with Shutterstock's huge search platform that allows users to upload their content.
The companies expect the merger to cut costs and increase profitability by offering a broader set of services for media, advertising, and content creation.
Despite these expectations, there is an antitrust risk.
The merger will be the first test of how favorably the new Trump administration's antitrust authorities will view mergers between major players after the Biden administration blocked high-profile deals in the supermarket and airline industries.
