Getty Images scraps $3.7 billion merger with Shutterstock over UK scrutiny
Getty Images and Shutterstock Merger Termination: Key Details and Implications
Background of the Merger
June 30 (Reuters) - Getty Images said on Tuesday it has called off its planned merger with Shutterstock due to the UK competition regulator's requirement to sell Shutterstock's editorial business as a condition for approval.
Two of the largest players in the licensed visual content industry announced the deal in January last year to create a $3.7 billion stock-image powerhouse geared for the AI era.
UK Competition and Markets Authority's Involvement
Conditional Approval and Regulatory Concerns
Britain's Competition and Markets Authority in May conditionally approved the merger, requiring Shutterstock to sell its editorial arm to address concerns over the supply of news content in the country.
The regulator's independent inquiry group had found that the editorial business, if not sold, would reduce choice for UK media outlets and could ultimately raise prices for customers, as Shutterstock is one of the "few meaningful" rivals to Getty.
Termination of the Merger Agreement
Getty's Response and Next Steps
Getty was not obligated to accept this condition under the terms of the merger agreement and will officially terminate the deal after the extended deadline of July 6, the company said in a regulatory filing on Tuesday.
Exploration of Strategic Financing Options
Getty said its board also plans to engage a financial adviser to explore strategic financing options for the company.
Financial Implications of the Termination
Termination Fees and Stock Market Reaction
Shutterstock and Getty had each agreed to pay a $32.7 million termination fee to the other party under certain circumstances if their proposed merger collapses, according to the terms of the agreement. Getty faces a $40 million fee if Shutterstock exercises its financing termination right, though Getty would not be required to pay both fees.
Shares of Getty were down 1.1% at $0.85 in volatile extended trading, while those of Shutterstock plunged about 31% to $9.57.
Industry Context
Getty competes with Reuters and the Associated Press in providing photos and videos for editorial use.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Maju Samuel)
