Carlyle Group has emerged as the winning bidder for Getty Images, the world's largest distributor of stock photos and videos, in an auction that pit some of the biggest names in private equity against one another.
The final price of $3.3-billion (U.S.) came in well below initial expectations of up to $4-billion, however, and also below revised expectations of about $3.6-billion that surfaced in recent weeks.
Carlyle will take a majority interest in the company, while co-founder and chief executive Jonathan Klein will also invest significant equity. Mark Getty, co-founder and chairman of the company, and the Getty family, will roll their ownership stake into the agreement.
Getty is being sold by Hellman & Friedman, a San Francisco-based private equity firm, and this agreement represents the latest instance of financial sponsors swapping assets with one another, rather than selling to strategic buyers or listing their portfolio companies publicly.
Hellman & Friedman took Getty private in 2008 for $2.4-billion and swiftly recouped much of its investment in Getty through a pair of special dividends. Getty paid out $496-million to its owners in 2010 and recently announced a $379-million dividend for its owners.
Earlier this year, Hellman & Friedman hired Goldman Sachs and JPMorgan Chase & Co. to explore a flotation or sale, the Financial Times first reported in May. But initial interest from private equity firms and the shaky market for public offerings pushed the company towards a second successive private equity owner.
A field that once included Kohlberg Kravis Roberts and TPG was in recent weeks narrowed down to Carlyle and CVC Capital Partners. CVC declined to top Carlyle's final bid, however, leaving the price short of initial expectations.
Mr. Getty and Mr. Klein founded Getty in 1996 with aims to bring the fragmented stock photography business into the digital age. Though valued below its peak last decade, the company has continued to prosper by diversifying into video and music licensing, even as many of its traditional clients, including newspapers and magazines, have suffered.
Eliot Merrill, Carlyle managing director, said: "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."
When Getty was taken private by Hellman & Friedman, shareholders received $34 a share in cash, well below the $95 level the shares reached in December 2005. Warren Hellman, co-founder of Hellman & Friedman, last year died at the age of 77.
The stock photography industry has been active lately. KKR recently paid $300-million for a 50 per cent stake in Fotolia, a stock photography business focused on the European market, and a U.S. rival, Shutterstock, filed papers to raise $115-million in an initial public offering in New York.