Getty Images (GETY) and Shutterstock (SSTK) have announced a $3.7 billion merger, uniting two major players in the licensing of photographs and other visual content.
The announcement sent both companies’ stocks soaring, while Adobe (ADBE), a competitor in design tools and visual content licensing, saw its stock dip, potentially facing stiffer competition from the newly combined entity.
“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,” said Getty Images CEO Craig Peters.
Rationale Behind the Getty-Shutterstock Deal
The merger was announced during the closing days of the Biden administration, known for its tough stance on antitrust issues. However, the incoming administration under President-elect Trump is expected to adopt a more measured approach toward such deals.
The companies anticipate significant cost savings from the merger, with projections of $150 million to $200 million annually in operating and capital expenses.
Additionally, the combined entity aims to position itself as a formidable competitor in the rapidly evolving market for generative artificial intelligence, which is transforming the creation of visual content.
The merger announcement underscored the “fast-evolving and highly competitive environment” as a driving factor behind the deal.
Terms of the Getty-Shutterstock Merger
Under the agreement, Shutterstock investors will receive $28.85 per share in cash for each of their shares. Alternatively, Shutterstock shareholders can opt to receive GETY stock or a combination of cash and stock.
After the merger is finalized, Getty shareholders will own approximately 55% of the combined company. Craig Peters, the current CEO of Getty Images, will continue to lead the new entity.
Market Reaction: GETY and SSTK Stocks Surge
Following the announcement, GETY stock jumped 24% during Tuesday afternoon trading, while Shutterstock shares climbed 20%.
Both companies have faced prolonged declines in stock value. Shutterstock shares are down more than 75% from their 2021 peak, and Getty’s stock has dropped over 90%.
Meanwhile, Adobe’s stock fell 1.6%, in line with the Nasdaq composite’s overall loss.
Adobe’s shares recently hit an 18-month low after UBS reduced its price target from $525 to $475, citing the “fiercely competitive” creative AI market.