As Gen AI washes over the internet, sparing no professional creative’s job, the two largest competing stock media agencies are trying to join forces and create the final boss of stock media. Time will tell whether the landscape for stock media becomes a creative wasteland overrun by AI slop, or whether a merged Shutterstock and Getty Images will find a way to carve out a profitable role in the rapidly changing game of royalties, copyrights, and licensing, leveraging their closed gardens with vast libraries of “real” visual data. Nobody has the answer. Fortunately, the Shutterstock/Getty merger arb opportunity will be gone long before the dust settles.
This isn’t the best merger arb opportunity I’ve seen, but it’s worth writing up and one I’m keeping an eye on, simply because you’re staring at a not-too-shabby 95% IRR, derived from a current 28.3% spread from the deal consideration, by buying the Shutterstock common share at market.
When the merger plan was announced nine months ago on January 7, it was cheered by the market with a 15% share price jump on the day, tallying a 16% premium to deal consideration. But the enthusiasm had a rough hangover, which led to a slow bleeding over the following four months as Shutterstock’s share price slowly halved from a high of $34.5 per share down to ~$15 per share by mid-April. As of today, the share price has recovered almost 40% from that bottom, yielding today’s deal spread, with the deal slated to close before year-end. 82% of shareholders voted in favor back in June. The idea now is to handicap the odds of it closing and the downside in the case it doesn’t.
Mind that I’ve spent less than a day on this deal, so please do your own due diligence before you decide to go for it.