(Reuters) – Getty Images said on Tuesday it would merge with a rival Shutterstock (NYSE: ) to create a $3.7 billion stock market powerhouse aimed at the artificial intelligence era, in a deal that is likely to draw antitrust scrutiny.
The move comes as the licensed visual content industry faces threats from generative AI tools such as Midjourney and OpenAI DALL-E, which can generate images and video in response to a user’s simple text query.
Under the deal, Shutterstock shareholders can choose to receive either $28.80 per share in cash, or 13.67 Getty Images shares, or a combination of 9.17 Getty shares and $9.50 in cash for each Shutterstock share they own.
Shutterstock shares jumped 26.5% in premarket trading, while Getty Images rose 50.2%. Stocks of both companies have fallen by the least in four years, as increasing use of mobile cameras reduces demand for stock photography.
The deal will help the companies improve “content offerings, expand event coverage and deliver new technologies,” said Craig Peters, CEO of Getty Images.
Peters will serve as CEO of the combined company, in which Getty Images investors will own about 54.7% and Shutterstock shareholders the rest.
Getty competes with Reuters and the Associated Press to provide editorial photos and videos.
The deal is expected to generate between $150 million and $200 million in annual cost savings by the combined company’s third year.
It will be called Getty Images Holdings and will continue to trade on the New York Stock Exchange under the ticker “GETY.”
