Getty Images Acquired by Private Equity Firm

on Aug 17, 2012

On Wednesday (August 15), the world’s second-largest private equity firm, Carlyle Group (CG:NSQ), agreed to the purchase of Getty Images for $3.3 billion (£2.1 billion) after teaming up with the photo agency’s management. Carlyle will take a majority stake in Getty Images, the world’s largest distributor of stock photos and videos, after reaching a deal with the previous controlling stake owner, Hellman & Freidman. As part of the deal, the Getty family, which founded the company in 1995, and CEO Jonathan Klein, will increase their holdings in Getty Images to nearly 50 per cent, from 30 per cent during the previous partnership of the company.

Carlyle Group emerged as the winning bidder for Getty Images in an auction that fetched less than hoped for by the company’s private equity owners. The final price of $3.3 billion came in well below Hellman & Friedman’s initial expectations of up to $4 billion (£2.5 billion), and also below revised expectations of about $3.6 billion (£2.3 billion) that surfaced in recent weeks.

!m[](/uploads/story/271/thumbs/pic1_inline.png)Hellman & Friedman, a San Francisco-based private-equity firm, purchased Getty Images in 2008 for $2.4 billion (£1.5 billion) at a time the photo distributor was struggling to adjust to the declining print-media businesses and a tumbling stock price. Getty made a difficult transformation from print-based sources to digitally-focused medias. The company, however, managed to increase its online presence with innovative technology solutions. For instance, the photo agency used robotic cameras to shoot 3D content in 360 degree format for the first time at the London’s Olympics. Recently, the company has also acquired several of its rivals, including the UK picture firm Scoopt and online library iStockPhoto, in a bid to boost its own catalogue of photography. Today, the company has 1.3 million customers per year, gaining an additional 100,000 per quarter, co-founder and Chief Executive Jonathan Klein said.

Getty Images have shown promising results since coming under the ownership of Hellman & Friedman. “We acquired Getty Images in 2008 because we believed in its strategic direction, growth potential and ability to build on its leading position as one of the world’s premier media franchises,” Andy Ballard, Hellman & Friedman’s managing director, said in a statement. “Our partnership exceeded our expectations,” he added.

Getty’s growth helps explain why Carlyle Group purchased the photo distributor in such a highly-valued acquisition. Eliot Merrill, Carlyle’ managing director said: “Getty Images is the premier, digital global marketplace for commercial visual content. We look forward to partnering with Mark Getty, Jonathan Klein and the talented Getty Images management team. We will harness Carlyle’s financial resources and global network to help take Getty Images to the next stage of product innovation and global growth.”

The transaction is now subject to regulatory approval and is expected to close this year. The takeover is part of a recent buying spree for Carlyle Group. The private equity firm has been an active buyer in recent months, purchasing a majority stake in TCW Group, a Los Angeles-based investment manager. Carlyle’s latest deals also include taking control of Sunoco’s (SUN:NYQ) huge Philadelphia refinery and buying a stake in railroad operator Genese & Wyoming (GWR:NYQ).


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