Hellman & Friedman acquires Getty Images for $2.4 billion

Our Marketing Bureau
26 February 2008

Getty Images Inc., the world's leading seller of stock photographs, illustrations and video footage, has agreed to be acquired by private equity firm Hellman & Friedman for $2.4 billion, including debt of around $300 million, to be assumed by the buyer. The company has recently seen its margins decline, and has been looking for strategic options.

Hellman & Friedman has offered Getty Images shareholders $34 a share, which is at a premium of 55 per cent over Getty's closing price on 18 January 2008, the day on which it announced the hiring of Goldman Sachs as an adviser for a possible sale. Getty's board has given its approval to the bid, and the takeover is expected to be completed in the second quarter of 2008.

Getty Images' share price had halved in the past year as the company suffered a slowing down of its rights-managed pictures business. The share had peaked above $94 in November 2005, and tumbled to $21.80 on 18 January 2008.

The Seattle, USA, based Getty Images, grew rapidly during the 1990s through acquisitions of stock photography firms. Its main business is supplying photographs, illustrations and videos to media, marketing and advertising companies. The core of this business, for Getty, is selling 'rights-managed pictures', and this business was affected by Internet-based text-only ads and by cutthroat competition from rival firms.

In 2007, revenue grew 6.3 per cent to $857.6 million from $806.6 million in 2006. Cost of revenue as a percentage of revenue rose to 26.6 per cent in 2007 from 25.6 per cent earlier. Net income for 2007 was $125.9 million, or $2.10 per diluted share, compared to $130.4 million, or $2.11 per diluted share, in 2006. Net income in the fourth quarter of 2007 was down to 48 cents a share from 51 cents in the fourth quarter of 2006. This was after Getty Images had slashed jobs and consolidated its offices to control costs.

According to Jonathan Klein, co-founder and chief executive officer of Getty Images, the company's board of directors ''has thoroughly evaluated strategic alternatives for Getty Images and has determined that this outcome is in the best interests of our stockholders as it provides them with superior and certain value. Furthermore, Hellman & Friedman brings specific industry expertise and support for the vision of the company's management team that will benefit our employees, customers and partners.''