Getty Images and Shutterstock to join forces for $3.7 billion to boost competition

Highlights:

The new company will save between $150 million and $200 million annually in operating and operational costs.

The newly created business will be able to compete better with technology companies that use artificial intelligence, disrupting the market offer of virtual content creation.

Key background:

Getty Images (GETY) and Shutterstock (SSTK) have agreed to a dynamic $3.7 billion merger, aimed at consolidating their positions as leading licensors of visual content. The deal, which has sent both companies’ stocks soaring, is poised to deliver significant cost savings while strengthening their competitiveness in the rapidly evolving visual content market. On the other hand, Adobe (ADBE) saw its stock price drop following the announcement, indicating potential challenges ahead from the newly formed company.

Getty Images CEO Craig Peters emphasized the transformation of integration, citing opportunities to improve content offerings, expand event coverage, and incorporate advanced technology to better serve customers. The financial benefits of the merger are estimated to result in annual savings of $150 million to $200 million in operating and operational costs. Additionally, the combined company will be in a better position to compete against larger technology firms that are using artificial intelligence (AI) to disrupt the creation of visual content.

While the deal is expected to advance innovation, it also faces scrutiny in a regulatory environment that has seen increased antitrust concerns under the Biden administration. However, industry analysts expect a more balanced approach under President-elect Trump.

The terms of the deal stipulate that Shutterstock shareholders will receive $28.85 per share in cash, with an option to take a combination of cash and Getty stock. Once completed, Getty shareholders will hold approximately 55% of the combined company, and Peters will continue as CEO.

The merger comes at a time when both companies have experienced steep stock declines, with Shutterstock down more than 75% from its peak in 2021 and Getty down more than 90%. After the announcement, Getty stock rose 24%, and Shutterstock stock rose 20%. In contrast, Adobe stock sank 1.6%, reflecting broader market trends, as the company faces intensifying competition in the creative AI space. This agreement marks an important moment in the licensing and visual content industry, which could reshape the competitive landscape for years to come.