Getty Images has scrapped its $3.7 billion (£2.8 billion) merger with rival Shutterstock after Britain's competition watchdog ruled it must offload part of the business to gain approval. The two companies had agreed a tie-up in January to bring together two of the biggest players in images and video.
CMA Concerns Over Market Dominance
The Competition and Markets Authority (CMA) raised concerns over the dominance of the combined business and the impact on editorial content, which it said could lead to less choice and higher prices in the UK. In May, the CMA said it would approve the deal only on condition that Getty sells Shutterstock's editorial arm, which provides content for news outlets. The CMA's inquiry group found that without the disposal, the combined business would limit UK media outlets' choices and could increase prices for UK customers.
Getty's Decision to Abandon
Getty said in a regulatory filing late on Tuesday that it was not prepared to sell off the editorial arm of Shutterstock and was therefore calling off the merger. It stated: “The UK Competition and Markets Authority conditioned its required clearance of the transactions contemplated by the merger agreement upon a sale of Shutterstock’s editorial business. Getty Images is not required to accept that condition under the terms of the merger agreement.” The company added that its board would keep a financial adviser to offer advice on “strategic financing alternatives”.
Market Reaction
New York-listed Getty saw its shares fall 4% soon after market opening on Wall Street, while Shutterstock’s stock plunged by more than a quarter, down 28%. The CMA said that “any decision by Getty to abandon the merger is a commercial one”. A spokesman for the regulator added that it “cleared the merger on the condition that Getty sells Shutterstock’s editorial business – something they initially offered to do at an earlier stage of proceedings”. They said: “We’ve been working closely with Getty and Shutterstock on the proposed sale and have been engaging with potential buyers to assess their suitability. That process was at an advanced stage at the time of Getty’s announcement.”
Industry Concerns
During the CMA’s initial probe into the merger, it said it heard “widespread concerns” from businesses, trade associations and other stakeholders across the UK media and creative sectors about the potential impact of the deal. These included concerns from the News Media Association, whose members publish around 900 media titles in the UK and rely on licensed imagery.
