Getty Plans to Terminate Shutterstock Merger Because of UK Regulations

Just over four months after a UK watchdog raised concerns about the merger between US photo agencies Getty Images and Shutterstock, Getty Images announced plans to terminate the $3.7 billion merger agreement.

As The Wall Street Journal reports, the U.K. Competition and Markets Authority told Getty Images and Shutterstock that its clearance of the merger would require that Shutterstock sell its editorial business, which Getty said it would not be willing to do in view of the existing merger agreement.

WSJ says Getty’s board voted unanimously against selling Shutterstock’s editorial imaging business and would instead terminate the merger agreement next Monday, July 6, per new SEC filings. That is, unless something significantly changes between now and then, which seems unlikely. There is, at the very least, newly cast doubt on the merger, which has been polarizing, to say the least. It is a $3.7 billion merger, so the stakes are extremely high.

After news of the likely termination of the merger broke, Getty Images’ stock dipped by nearly 8%. Shutterstock Inc.’s stock price is down considerably more. At the time of writing, the stock is down about 30% today. So far this year, Shutterstock’s shares are down 48%.

It is worth noting that the merger had already been approved in the United States, after the US Department of Justice (DOJ) gave it the green light in February.

“We are very pleased with the DOJ’s decision in recognizing the merits of this transaction,” Getty Images CEO Craig Peters said in February. “With today’s DOJ clearance, we take a significant step forward in bringing together these two companies and unlocking opportunities to strengthen our financial foundation and invest in our future.”

Both Getty Images and Shutterstock are working to fend off generative AI imagery in the stock market, as Reuters notes, so the deal falling through harms both companies, albeit to varying degrees.

“We are not convinced that scale would have done more than stave off competitive pressures for a little while longer, but without the scale that the merger would bring, the outlook for each looks even more difficult,” Luke Stillman, a managing director for the trend advisory firm Madison and Wall, tells Reuters.