Getty On Track To Get New Private Equity Owner

Posted on 7/5/2012 by Jim Pickerell | Printable Version | Comments (0)

At least five private equity firms are bidding to buy Getty Images from Hellman & Freedman (H&F) in a leveraged buyout worth an estimated $4 billion.

Included among those still in the second round of bidding are Kohlberg Kravis Roberts & Co. (KKR) and TPG Capital. Sources indicate that Bain & Company was among the initial bidders, but balked at Hellman’s price expectations and has dropped out. A deadline for the second round of bidding hasn’t been set.

In May we reported that the Getty owners were considering an IPO, but given the interest from those pursing a leveraged buyout the possibility of an IPO has now been put on the back burner.

Since H&F’s acquisition of Getty in 2008 the business has seen little growth in earnings before interest, tax, depreciation and amortization (EBITDA). However, some investors seem to believe that there will be increasing demand for Getty’s online imagery products and services. As we pointed out yesterday there are strong indications that the demand for images from iStockphoto declined around 22% in the first half of 2012 compared to the same period in 2011. iStock is Getty’s most successful line of business.

One of the things that is certainly driving this deal is that private equity firms are sitting on a lot of cash and having trouble finding ways to invest it.

At around $4 billion, a Getty deal would be among the larger private-equity transactions this year. Investment bankers say credit is available at reasonable interest rates, but buyout firms still need to put up around 30% of a deal's value in cash ($1.2 billion on a $4 billion deal). This limits the ability of many buyout firms to pursue large deals. Some of those bidding are considering bringing in limited partner investors who will put up money that is targeted directly to this deal.

As a public company Getty’s shares peaked at $95 in December 2005, but subsequently fell sharply. Part of the reason was that low priced microstock began to take an increasing share of the market and even the growth in new customers and user demand was not enough to offset the low prices. Hellman & Friedman paid $34 a share to take the company private in 2008 and invested $941.3 million of its own money as part of its $2.4 billion leveraged buyout. As of early this year H&F has received $883 million in dividends. Most private equity investors try to turn over their investments in five years.

Getty had 2011 revenues of about $945 million and is said to employ roughly 1,900 people.

This report is a summary of information provided by the Financial Times, the Wall Street Journal and Reuters

Copyright © 2012 Jim Pickerell. 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

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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