Getty Images and Shutterstock have announced a groundbreaking merger of equals, aiming to create a visual content powerhouse valued at approximately $3.7 billion. This strategic alliance is poised to revolutionize the visual content industry by harnessing the strengths and resources of both companies. Under the terms of the agreement, Shutterstock investors are presented with several options for their shares: they can opt for approximately $28.85 in cash, or they may choose to receive around 13.67 Getty shares.
Alternatively, there is a mixed consideration option, offering 9.17 Getty shares alongside $9.5 in cash. This flexible approach to shareholding rewards investors and reflects the collaborative spirit of the merger. In the stock market, the reaction was swift; Shutterstock shares saw a substantial increase of 23% on Tuesday, while Getty shares surged by 26%.
The merger entails a significant transfer of capital, with Getty committing to pay Shutterstock $331 million in cash and 319.4 million shares. However, the completion of the merger is contingent upon obtaining necessary regulatory approvals and securing the endorsement of stockholders from both companies.
Additionally, it may involve extending or refinancing Getty's existing debt obligations. Once the transaction is finalized, Getty shareholders will control approximately 54.7% of the newly formed entity, named Getty Images Holdings, with the remainder held by Shutterstock. Notably, this newly merged company is expected to retain the ticker symbol GETY on the New York Stock Exchange. Craig Peters, CEO of Getty, emphasized the timing of the merger amidst a growing demand for high-quality visual content across various sectors.
He stated, "With the rapid rise in demand for compelling visual content across industries, there has never been a better time for our two businesses to come together. By combining our complementary strengths, we can better address customer opportunities while delivering exceptional value to our partners, contributors, and stockholders." Forecasts suggest that the combined entity will generate revenues between $1.98 billion and $1.99 billion on a pro-forma basis for 2024, expecting subscription sales to account for 46% of this total.
Analysts predict that the merger will enhance earnings and cash flow starting from the second year, with anticipated annual cost synergies ranging between $150 million and $200 million during the first three years post-merger. Reflecting on the merger's potentials, Shutterstock CEO Paul Hennessy remarked, "We expect the merger to produce value for the customers and stockholders of both companies by capitalizing on attractive growth opportunities to drive combined revenues, accelerating product innovation, realizing significant cost synergies, and improving cash flow.
We look forward to working closely with the Getty Images management team to complete the transaction and drive the next chapter of growth." In terms of leadership, Peters will take the helm as CEO of the merged company, while Mark Getty will continue to serve as Chairman. The board of directors will feature both Peters and Hennessy, ensuring a unified vision and strategic direction for the newly formed organization. This merger stands as a testament to the evolving landscape of visual media and the critical role these companies will play in shaping the future of the industry..