Shutterstock and Getty Images Combine to form a leading visual content company

 Today, it was reported that Getty Images Holdings, Inc. (NYSE: GETY) and Shutterstock (NYSE: SSTK) had signed a final merger agreement to join as equals, forming a leading visual content company. With an estimated enterprise value of $3.7 billion[i], the merged business will be known as Getty Images Holdings, Inc. and will keep trading on the New York Stock Exchange under the ticker "GETY." 

As a merged business, Getty Images and Shutterstock will provide a more comprehensive and deep content library for users, more possibilities for its contributor community, and a stronger dedication to embracing inclusive and representational material. Furthermore, in a rapidly changing and fiercely competitive market, the merged company's stronger financial profile is anticipated to boost customers' capacity for product investment and innovation.

Craig Peters, CEO of Getty Images, stated, "Today's announcement is exciting and transformative for our companies, unlocking multiple opportunities to strengthen our financial foundation and invest in the future—namely, expanding event coverage, improving our content offerings, and delivering new technologies to better serve our customers." "There has never been a better moment for our two companies to collaborate, given the explosive growth in demand for captivating visual content across sectors. We can more effectively handle client prospects and provide outstanding value to our partners, donors, and investors by fusing our complementary skills.

Paul Hennessy, CEO of Shutterstock, stated, "We are thrilled by the opportunities we see to enhance our product offering and expand our creative content library to meet diverse customer needs." Through the realization of significant cost reductions, improvement of cash flow, acceleration of product innovation, and capitalization on attractive growth possibilities to increase combined revenues, we anticipate that the transaction will create value for both companies' consumers and investors. To finish the deal and launch the next phase of expansion, we are eager to collaborate closely with the Getty Images management team.

Financial and Strategic Advantages

Innovative content development, broader event coverage, and customer-facing tools and capabilities like search, 3D photography, and generative AI are all made possible by cutting-edge innovation.    

Portfolios that complement one other: produces a wider range of visual content products, including 3D, static photos, videos, and music.

Increased prospects for content producers: Offers contributors much more chances to connect with clients worldwide.

Stronger balance sheet and increased cash flow generation: The combined business will be in a strong position to lower borrowing costs, accelerate debt repayment, and seize new opportunities to generate value for customers and stockholders by deleveraging the combined balance sheet through the transaction and generating more robust cash flow.

Considerable synergies: Promotes anticipated run-rate synergies between SG&A and CAPEX of $150 million to $200 million during the first three years after the closing, with around two-thirds of those synergies being delivered in the first two to twenty-four months.

Strong Financial Profile: The merged business would have a strong financial profile on a pro forma basis in 2024.

• Between $1,979 million and $1,993 million in income, of which 46% comes from subscriptions
• Prior to synergy Between $569 million and $574 million in EBITDA
• Prior to synergy Capital expenditures of $461 million to $466 million minus adjusted EBITDA
• 3.0x pro forma 2024 pre-synergy net leverage before synergy EBITDA

Governance and Leadership

Craig Peters, the CEO of Getty Images, will take over as CEO of the merged business after closing. Craig Peters, the CEO of Getty Images, six directors appointed by Getty Images, and four directors appointed by Shutterstock, including Paul Hennessy, the CEO of Shutterstock, will make up the merged company's eleven-member board of directors. Mark Getty, who is presently the chairman of Getty Images, will serve as the chairman of the merged company's board of directors.

Details of the Transaction

At closing, Shutterstock investors may choose to receive one of the following benefits under the terms of the agreement, which was unanimously authorized by the boards of directors of both companies:

For every share of Shutterstock common stock they possess, they will get $28.84870 in cash;

For every share of Shutterstock common stock they possess, they will get 13.67237 shares of Getty Images common stock, or a mixed consideration of 9.17 shares of Getty Images common stock plus $9.50 in cash.

In order to guarantee that the total consideration payable by Getty Images consists of 9.17 shares of Getty Images stock per Shutterstock share as of right before close and $9.50 in cash per Shutterstock share as of right before close, Shutterstock shareholder elections at close are subject to proration.

The total price payable by Getty Images would be $331 million in cash and 319.4 million shares of Getty Images stock, based on the number of common shares outstanding on the signing date. These estimates do not assume any vesting of currently unvested Shutterstock equity holdings between signing and closure, nor do they account for the impact of unvested equityholders as of the signing date.

Only upon vesting with regard to RSU and PSU grants that were unvested at closing would shutterstock equityholders be entitled to receive the mixed consideration mentioned above. Option holders of shutterstock will see their options and strike prices changed by a ratio equal to (i) 9.17 and (ii) $9.50 divided by the 10-day average closing stock price of Getty Images common stock as quoted on the NYSE for the two (2) business days ending before the close. At the conclusion of the transaction, any employment contracts will be taken into consideration for equity treatment. The total cash and share amounts are estimates that might fluctuate between the signing and closing.

On a fully diluted basis, owners of Shutterstock and Getty Images will control roughly 45.3% and 54.7% of the combined firm upon closing. Until the deal closes, Shutterstock will continue to declare and pay quarterly cash dividends in line with its dividend policy, at the Board of Directors' discretion.

Time and Closing

Customary closing conditions must be met for the deal to proceed, such as obtaining the necessary governmental clearances, getting the consent of Getty Images and Shutterstock stockholders, and extending or refinancing Getty Images' current debt commitments.    

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