A prominent visual content firm with a combined enterprise value of around $3.7 billion has been created by a final merger agreement between Getty Images Holdings (GETY, Financials) and Shutterstock (SSTK, Financials). Operating under Getty Images Holdings, the combined company will keep trading on the New York Stock Exchange under the ticker “GETY.” Following the news, Getty Images’ pre-market trading saw an 82.88 percent jump, bringing its value to $4.70.
Beginning in year two, the deal is anticipated to be accretive to profits and cash flow; it will provide annual cost savings between $150 million and $200 million within three years. The merged business wants to use a larger content library, improved financial stability, and more capacity for innovation to better serve consumers across creative, media, and advertising sectors.
Combining complementing visual contentstill photos, films, music, and generative artificial intelligence technologiesthe merger will streamline Getty Images CEO Craig Peters stressed the room for expansion. CEO of Shutterstock Paul Hennessy underlined how well the combination aligned with consumer and shareholder objectives, pointing chances to boost cash flow, speed product innovation, and increase revenue.
With pre-synergy EBITDA expected between $569 million and $574 million, the merged business projects income on a pro forma basis for 2024 between $1.979 billion and $1.993 billion. Subscription services are estimated to provide up roughly 46 percent of the income.
With two-thirds of cost cuts aimed in the first 24 months, the merger’s financial structure consists of deleveraging the balance sheet and obtaining notable synergies. Improved cash flow should help to support reduced borrowing rates and faster debt payback.
Peters will be CEO of the merged firm upon completion; Mark Getty will be chairman and the board of directors consists of eleven members: six appointed by Getty Images, four by Shutterstock. With Getty Images holding the remaining 54.7 percent and 45.3 percent of the whole business owned by shareholders of Shutterstock, respectively
Three choices for compensation will be available to shareholders of Shutterstock: $28.85 each in cash; 13.67 shares of Getty Images stock; or a blended option combining 9.17 shares of Getty Images stock and $9.50 in cash each Shutterstock share.
The transaction’s whole consideration consists of 319.4 million Getty Images shares plus $331 million in cash. Finalizing the agreement calls for shareholder approval and regulatory approvals.
This article first appeared on GuruFocus.