Getty Images and Shutterstock announced that they entered into a definitive merger agreement to combine in a merger of equals transaction, creating a premier visual content company. This combined company, which would have an enterprise value of about $3.7 billion, will be named Getty Images Holdings and will continue to trade on the New York Stock Exchange under the ticker symbol GETY.
As a combined company, Getty Images and Shutterstock will be offering a content library with greater depth for the benefit of customers, expanded opportunities for its contributor community and a reinforced commitment to the adoption of inclusive and representative content. And the stronger financial profile of the combined company is expected to create increased capacity for product investment and innovation for customers in a fast-evolving and highly competitive environment.
These are the strategic and financial benefits:
— Facilitates greater investment in innovative content creation, expanded event coverage, and customer-facing technologies and capabilities such as search, 3D imagery and generative AI.
— Creates a broader set of visual content products across still imagery, video, music, 3D and other asset types.
— Provides contributors substantially greater opportunities to reach customers around the world.
— By deleveraging the combined balance sheet through the transaction and driving more robust cash flow, the combined company will be well positioned to accelerate debt repayment, reduce borrowing costs, and capitalize on new opportunities to create value for customers and stockholders.
— Drives expected run rate synergies across SG&A and CAPEX between $150 million and $200 million achieved within the first three years post-close, with approximately two-thirds expected to be delivered within the first twelve to twenty-four months.
— On a pro forma 2024 basis the combined company would have an attractive financial profile:
1.) Revenue of between $1,979 million and $1,993 million, including 46% of subscription revenue
2.) Pre-synergy EBITDA of between $569 million and $574 million
3.) Pre-synergy Adjusted EBITDA less capital expenditures of between $461 million and $466 million
4.) Pre-synergy net leverage of 3.0x pro forma 2024 pre-synergy EBITDA
At the closing, Getty Images’s CEO, Craig Peters, will serve as CEO of the combined company. The combined company will have an eleven-member Board of Directors, comprised of Getty Images CEO Craig Peters, six directors designated by Getty Images and four directors designated by Shutterstock, including Paul Hennessy, Shutterstock CEO. The Chairman of the Board of Directors of the combined company will be Mark Getty, currently Chairman of Getty Images.
Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Shutterstock stockholders at close can elect to receive one of the following:
— $28.84870 per share in cash for each share of Shutterstock common stock they own;
— 13.67237 shares of Getty Images common stock for each share of Shutterstock common stock they own; or
— A mixed consideration of 9.17 shares of Getty Images common stock plus $9.50 in cash for each share of Shutterstock common stock they own.
At the closing, Getty Images stockholders will own approximately 54.7% and Shutterstock stockholders will own approximately 45.3% of the combined company on a fully diluted basis. Shutterstock will, at the discretion of its Board of Directors, continue to declare and pay quarterly cash dividends, in accordance with its dividend policy, pending the close of the transaction.
The deal is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals, the approval of Getty Images and Shutterstock stockholders and the extension or refinancing of Getty Images’ existing debt obligations.
Berenson & Company is acting as lead financial advisor and J.P. Morgan Securities is acting as a financial advisor to Getty Images and Skadden, Arps, Slate, Meagher & Flom is serving as legal advisor. Allen & Company is acting as exclusive financial advisor to Shutterstock and White & Case is serving as legal advisor.
KEY QUOTES:
“Today’s announcement is exciting and transformational for our companies, unlocking multiple opportunities to strengthen our financial foundation and invest in the future—including enhancing our content offerings, expanding event coverage, and delivering new technologies to better serve our customers. 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.”
– Craig Peters, CEO, Getty Images
“We are excited by the opportunities we see to expand our creative content library and enhance our product offering to meet diverse customer needs. 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.”
– Paul Hennessy, CEO, Shutterstock
