Getty Images Stock Tumbles on In-Depth UK Merger Probe
Shares fall over 6% after the Competition and Markets Authority escalates its review of the planned Shutterstock acquisition, citing significant competition concerns.
Shares of Getty Images (NYSE: GETY) fell sharply in morning trading after the UK’s competition regulator announced it would launch an in-depth investigation into the company's proposed acquisition of rival Shutterstock (NYSE: SSTK), casting significant doubt over the future of the deal.
Getty’s stock price dropped more than 6% to $1.88 following the news. The UK's Competition and Markets Authority (CMA) confirmed on Monday it had referred the merger for a Phase 2 investigation, a step taken when the regulator believes a deal could lead to a “substantial lessening of competition” within the UK market. This move signals serious regulatory hurdles for a transaction intended to unite two of the world's largest providers of stock photography and digital media.
The escalation comes after the CMA concluded an initial Phase 1 review, determining that the remedies offered by the companies were insufficient to address its concerns. A Phase 2 investigation is a more rigorous and lengthy process, involving an independent panel that will conduct a detailed analysis of the merger's potential impact on customers, including businesses and creative professionals who rely on stock imagery.
“The CMA’s decision to move to Phase 2 is a significant setback for both companies,” said a market analyst at a London-based firm. “Referrals to this stage are relatively uncommon and indicate the regulator has fundamental concerns that won't be easily resolved. Investors are now pricing in a higher probability that the deal could be blocked or require substantial divestitures.”
In a divergent market reaction, shares of Shutterstock (NYSE: SSTK) rose around 2% to just over $25.00. The contrast suggests investors may believe Shutterstock is better positioned as a standalone entity if the deal fails, or that the financial and operational risks associated with the protracted regulatory battle lie more heavily with Getty as the acquirer.
The proposed merger, announced earlier this year, was framed as a strategic move to create a more robust competitor in a rapidly evolving digital content landscape, particularly with the rise of AI-powered image generation tools. Combining Getty’s vast historical archive and premium content with Shutterstock’s broad, subscription-focused platform was intended to create significant scale and synergies.
However, regulators are concerned that consolidating the two industry giants could reduce choice and drive up prices for customers. The CMA’s action reflects a broader trend of heightened antitrust scrutiny globally, where regulators are taking a more interventionist stance on large-scale mergers, especially in the technology and media sectors. According to CMA statistics from 2024, only a small fraction of proposed mergers are referred for a Phase 2 review, underscoring the gravity of the regulator's concerns in this case.
The Phase 2 investigation will now proceed over the coming months, with a final decision expected next year. The possible outcomes range from unconditional approval to outright prohibition of the merger. The CMA could also approve the deal subject to certain conditions, such as the forced sale of specific assets or business units to preserve competition in the market.
For Getty Images, the uncertainty presents a significant headwind. The company has already taken steps to finance the acquisition, pricing over $600 million in senior secured notes in early October intended for the merger. A prolonged and potentially unsuccessful regulatory battle could prove costly, diverting management focus and financial resources.