2 of the largest stock photo platforms are merging, sending their shares up

• Getty Images and Shutterstock are merging.
• The merger aims to save $200 million and boost revenue in three years.
• The new company will face competition from AI image-generation tools like Adobe's Firefly and DALL·E 3.

Getty Images and Shutterstock are merging in a deal that could help the company better prepare for artificial intelligence.

On Tuesday, Getty's stock jumped 24%, while shares of Shutterstock rose 14%, a sign that investors welcome the merger.

The combined company, which will be called Getty Images, will be worth $3.7 billion, Getty said in a release on Tuesday. It expects the deal to generate up to $200 million in cost savings over three years and come with more revenue opportunities.

On a call to announce the merger, Craig Peters, Getty's CEO, who will head the new company, and Paul Hennessy, Shutterstock's CEO, gave little weight to AI risks, saying AI is an opportunity for the companies.

"Our businesses have not seen any impact as a result of GenAI," Peters said. He said the companies would benefit from combining their products with AI.

"We see increased usage in our stock content from our AI customers, and we're seeing new customers coming into the franchise for our AI products," Hennessy said. "There's a one plus one equals to three on that front."

The companies are two of the largest in the visual content business. They provide editorial photographs and stock images used for content creation.

Getty is offering to pay about $28.85 in cash, or about 14 shares of Getty Images shares, for each Shutterstock share.

Details on the timeline of the combination were not announced.

The combined Getty and Shutterstock business will have stronger finances and plans to invest in content creation, event coverage, and generative AI, the release said.

Companies across industries are being proactive about AI-proofing their core businesses.

Getty and Shutterstock's stock image businesses face competition from AI image-generation tools such as Midjourney, Stable Diffusion, OpenAI's DALL·E 3, and Adobe's Firefly.

Getty also offers an image-generation service, trained on Nvidia's Picasso. In October, Shutterstock-owned GIPHY, a GIFs and stickers library, announced a partnership with TikTok to provide AI-powered GIF recommendations on the platform.

In June, Hennessy said Shutterstock earned $104 million in annual revenue from AI licensing agreements in 2023. He also projected that this revenue could reach up to $250 million annually by 2027.

Wedbush analysts led by Michael Pachter called the deal "Bigger is better," while reiterating their outperform rating on Getty.

"The two companies are highly complementary, with each stock photo service serving a different niche in terms of customer size, geography, asset type, and platform type," they wrote in a note on Tuesday.

The analysts added that they expect the deal to pass antitrust scrutiny because the industry is so competitive.