Getty Images Surprises with Easy Sell for $2.4 Billion

The New York Times is reporting Monday morning that Getty Images (GYI) has been sold to private equity firm Hellman & Friedman for $2.4 billion.

That's a lot of clams and represents a 55 percent premium over the company's share price on January 18th. Good for Mark Getty and Jonathan Klein, Getty's Chairman and CEO.

Getty Images' CEO Jonathan Klein

Personally I thought that Getty would have more trouble than this selling itself. While the company is undoubtedly a cash cow today, competition in the stock photography business (especially from the newly emerging "advanced amateur") is bound to significantly cut profit in the future.

Especially with a potential Microsoft (MSFT) buyout of Yahoo (YHOO), this could accelerate the advanced amateur as a competitor. Microsoft founder Bill Gates owns 100% of Getty's number one competitor Corbis and if Gates/Microsoft could broker a deal between Yahoo's Flickr and Corbis, this could represent a whole new wave of stock photography.

Increasingly amateurs are encroaching on this territory, previously only accessible to photo pros. To see the type of thing that I'm talking about, check out this photo posted by my friend Daniel Krieger Sunday about selling a photo to the Wall Street Journal for $250.

While these types of "one off" transactions are happening all over the place in the world of stock photography today (and eroding some of Getty's market clout), if Corbis and Flickr could somehow unite, this could create far more competition for Getty than a bunch of old guys sitting around a board table of some private equity firm might think -- no matter what today's cash flows at Getty look like.

Comments

[David V.]

According to www.madmergers.com GYI is trading at a 6.92% discount (20% annualized). You can view all the merger arbitrage returns for all pending stock mergers for free at www.madmergers.com.