Shares in Shutterstock (NYSE: SSTK) and Getty Images (NYSE: GETY) have exploded after the image libraries announced their merger.
At the time of writing, Getty stock is up 24.12% and Shutterstock is up 14.74% and rising fast.
The two companies have merged amid competition from phone cameras and generative AI, driving the need for stock images.
“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,” Getty Images CEO, Craig Peters said.
“By combining our complementary strengths, we can better address customer opportunities while delivering exceptional value to our partners, contributors, and stockholders.”
The combined company will have an enterprise value of US$3.7 billion. It will be named Getty Images Holdings, Inc., and trade on the New York Stock Exchange under the symbol GETY.
Under the merger, Shutterstock stockholders can choose from three options at the close. These options are $28.85 per share in cash for each share of Shutterstock common stock they own; 13.67 shares of Getty Images common stock for each share of Shutterstock common stock they hold; or 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 close, Getty Images stockholders will own around 54.7% and Shutterstock stockholders will own around 45.5% of the combined company on a fully diluted basis.
Combined the companies will generate around $2 billion in 2024 revenue and produce between $569 million and $574 million in earnings before interest, taxes, depreciation, and amortisation.
By year three of the merger, the expected annual synergies for the combined companies will be between $150 million and $200 million, accretive to earnings and cash flow beginning in year two.
Once the companies merge, Getty Image’s CEO, Craig Peters will act as CEO of the combined company.