Shares of Getty Images (GETY, Financial) surged by 25.28% following the company's announcement of a merger with Shutterstock (SSTK). The merger is designed to establish a leading visual content entity expected to significantly enhance financial performance in the upcoming years.
The merger between Getty Images and Shutterstock is poised to create a powerhouse in the visual content industry, promising cost savings of $150 million to $200 million within three years. The combined company, which will continue to operate under the Getty Images name and ticker GETY, is expected to enhance its earnings and cash flow starting in the second year of the merger. Getty shareholders will hold a 54.7% stake in the new entity, with Craig Peters as CEO and Mark Getty as board chair.
This strategic move is projected to generate approximately $2 billion in revenue and an EBITDA between $569 million and $574 million by 2024. The merger is a pivotal step for both companies, which will be subject to regulatory approvals, stockholder approvals, and the refinancing of Getty Images' debt before closing the deal.
Financially, Getty Images (GETY, Financial) exhibits a market capitalization of $1.32 billion, with a price-to-earnings (P/E) ratio of 26.83. The company has shown resilience despite challenges, with a current price of $3.22, which is notably close to its 3-year low according to various valuation metrics. It's important to note that the company is not currently offering dividends, as indicated by an FCF margin of 5.98% and an FCF yield of 4.15%.
While the company carries a degree of financial risk, as evidenced by its Altman Z-Score indicating distress, it simultaneously demonstrates strong valuation signals, with its price-to-book and price-to-sales ratios nearing 3-year lows. This suggests that GETY may be undervalued according to GF Value assessments.
Overall, the merger is a strategic step to capitalize on synergies within the visual content domain, providing investors with an opportunity to potentially benefit from enhanced market positioning and financial performance as the integrated company progresses.
