The Getty-Shutterstock Merger
Is the Getty-Shutterstock Merger a Win?
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The recent announcement of the Getty Images GETY 0.00%↑ and Shutterstock SSTK 0.00%↑ merger has sent shockwaves through the market. While the deal may seem beneficial for GETY 0.00%↑ shareholders, I believe it significantly undervalues SSTK 0.00%↑ and its immense potential given my $65pps 2027 target. It's a mess!
Shutterstock Inc
TL;DR Enter at $33 (1.2 B market cap). $SSTK’s significant subscriber base offers downside protection with an estimated intrinsic value of $65, representing an upside 24% 3yr cagr for 2027.The Genius’s Stock Market Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
A Look at the Deal:
Undervaluation: SSTK 0.00%↑ boasts a superior balance sheet and strong cash flow generation. The proposed merger price appears to significantly undervalue this strength.
Jon Oringer's Motives: The decision by Jon Oringer, Shutterstock's CEO and largest shareholder, to approve this deal raises serious questions. His motivations as a seller with minimal involvement in the combined entity remain unclear.
Unequal Burden: Shutterstock appears to have borne the brunt of efforts to bridge the value gap with Getty, contributing significantly less.
Termination fee: $32,700,00
Getty Images is planning to merge with Shutterstock unfortunately at :
Transaction Details
Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Shutterstock stockholders at close can elect to receive one of the following:
$28.84870 per share in cash for each share of Shutterstock common stock they own;
13.67237 shares of Getty Images common stock for each share of Shutterstock common stock they own; or
a mixed consideration of 9.17 shares of Getty Images common stock plus $9.50 in cash for each share of Shutterstock common stock they own.
Shutterstock shareholder elections at close are subject to proration to ensure that the aggregate consideration payable by Getty Images consist of $9.50 in cash per Shutterstock share as of immediately before close and 9.17 shares of Getty Images stock per Shutterstock share as immediately before close.
A Strategic Derivative Trade Insight:
Given these concerns, I believe closing out my long position in Shutterstock is the most prudent course of action. Instead of clinging to hope for a higher bid, I propose a more strategic approach:
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