Jupitermedia/Getty Deal Cleared, Background Revealed

Posted on 12/10/2008 by Julia Dudnik Stern | Printable Version | Comments (0)

On Monday, Jupitermedia announced that the U.S. Department of Justice and Federal Trade Commission have granted early termination of the review period for the proposed sale of Jupiterimages to Getty Images. Jupitermedia also filed a statement with the U.S. Securities and Exchange Commission, disclosing the details of negotiations that went back to late 2006.

The SEC statement confirms that initial negotiations culminated in a purchase price of approximately $388 million prior to Jupitermedia and Getty Images terminating the discussions in March of 2007.

In November 2007, general discussions were also held with an undisclosed second buyer. A third potential acquirer, also undisclosed but willing to pay $185 million, emerged in March 2008. As Jupitermedia continued discussions with these potential buyers, it also hired Merrill Lynch and instructed it to approach Hellman & Friedman—which had just purchased Getty Images—to discuss a potential acquisition.

In May 2008, the second potential buyer said it was still interested but needed more time, while the third said it wanted to pursue only the purchase of some—not all—Jupiterimages’ assets. Hellman & Friedman indicated that its preliminary valuation of Jupiterimages was in the range of $200 million.

In June, the second bidder offered to buy Jupiterimages for a price within the range of $165 million to $180 million, provided by a private-equity sponsor. The third bidder offered $60 million to $75 million for some of the company’s assets, and offer that was ultimately rejected as insufficient by Jupitermedia. Similarly little came from discussions with the fourth potential buyer, which emerged in July and made separate offers for the entire business and only its rights-managed assets, but had financing difficulties.

In August, the second bidder downgraded its offer to $130 million, citing market conditions. The same bidder also lost its financial backer. Getty’s offer of $140 million and its access to cash and additional financing via a credit facility positioned it at the top of the potential buyer list.

With some disagreement over exclusivity, negotiations continued until late September, when Getty Images chief executive officer Jonathan Klein proposed a revised purchase price of $120 million to Alan Meckler via email. Klein said the downgrade was based on the state of the credit and acquisition-finance markets.

In October, a fifth potential buyer emerged with an offer of $130 million, but Jupitermedia declined due to the buyer’s exclusivity and first-refusal requirements. There was also a concern that the buyer may downgrade its offer after completing due diligence. Proceeding was deemed to risky to existing offers.

By mid-October, Getty Images lowered its proposal to $75 million, “citing difficulty in securing borrowed funds under Getty Images’ existing credit facility as a result of the deterioration in the state of the credit and acquisition finance markets and general economic environment,” according to the SEC statement. Jupitermedia countered, and with a few more days of negotiation, the two companies struck the final deal: Jupitermedia board of directors approved the stock purchase agreement and the sale of Jupiterimages to Getty Images for $96 million, with $2 million placed into an indemnification escrow account and Jupitermedia retaining ownership of its Peoria, Illinois facility.

The transaction, still subject to the conditions of the purchase agreement, is expected to close in early 2009.


Copyright © 2008 Julia Dudnik Stern. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Comments

Be the first to comment below.

Post Comment

Please log in or create an account to post comments.