Investing.com - Shares in Getty Images (NYSE:GETY) surged on Tuesday after it announced that a merger with peer Shutterstock (NYSE:SSTK) to form a stock image titan worth approximately $3.7 billion ready to tackle challenges posed by the rise of artificial intelligence.
The move, which is still subject to the approval of shareholders and expected to receive scrutiny from regulators, comes as the firms are grappling with competition from the likes of AI-enhanced text-to-image platforms like OpenAI's DALL-E.
Under the terms of the agreement, Shutterstock shareholders can choose to receive $28.84870 per share in cash or 13.67237 shares of Getty Images. They could also opt for a combination of 9.17 shares of Getty Images and $9.50 in cash for each Shutterstock share they own.
Investors in Getty Images would own around 54.7% of the combined business, with the rest held by Shutterstock shareholders.
Craig Peters, the current chief executive of Getty Images, would serve as head of the combined group once the transaction is closed, the company said in a statement. The new entity would continue to trade on the New York Stock Exchange under the ticker symbol "GETY", it added.
"With the rapid rise in demand for compelling visual content across industries, there has never been a better time for our two businesses to come together," Peters said.
In particular, the companies said the transaction would facilitate greater investment in "innovative content creation", help expand event coverage, and build out customer-facing technologies and capabilities "such as search, 3D imagery and generative AI." The deal is also projected to lead to cost savings of between $150 million to $200 million annually by the third year after it is finalized.
"By combining our complementary strengths, we can better address customer opportunities while delivering exceptional value to our partners, contributors, and stockholders,” Peters added.
Getty Images' share price soared by over 31% in early US trading, while Shutterstock's share price also spiked by more than 22%.