The long-awaited $34.00 cash buyout of Getty Images, Inc. (NYSE: GYI) by Hellman & Friedman looks as though it is coming to an end. The company has issued a statement that today is the closing date and this is the last day that Getty shares will trade because of going private and being de-listed at the NYSE.
What is interesting is that Hellman & Friedman bought DoubleClick back in 2005 in a deal that was valued around $1.1 Billion, and within three years this was a leading huge Internet acquisition where the firm sold DoubleClick to Google (NASDAQ: GOOG). The private equity firm sold DoubleClick to Google for around $3.1 Billion.
Getty Images was our top performing Special Situation Newsletter pick where we identified the company’s structure in early 2007 as one that would fall victim to the equivalent of an effective industry de-merger. We saw the issues affecting Getty and taking it far south and the total buyout price was still under our expected price return exit. That’s because the erosion we expected came far faster and even harder than we expected.
Getty Images is roughly worth $2 Billion today. You could argue that the entire DoubleClick profit is being used to buy Getty. We think Getty will actually do better as a private company for now and the company has taken many steps (which readers and critics have written about how personally Draconian the measures were) to protect their business interests. Hellman & Jordan may do the same and it may not.
We aren’t inclined to predict who will own Getty Images after 2010 or 2011, but we are fairly certain that it will look different as an operating company or via who runs it. Hell, Bill Gates may even want to be a free agent by then and there is another shot for a monopoly or at least a highly dominant market share… and we aren’t talking about Microsoft (NASDAQ: MSFT)
Jon C. Ogg
July 2, 2008