An interesting story unfolded in the stock media industry this week: On Monday, an activist investor company made a public, non-binding $4 Billion takeover bid to acquire Getty Images –that’s twice its stock price at the time of the bidding– and on Tuesday, Getty declined.
This relevant development did not happen as out of the blue as it would initially seem, and it could affect Getty’s share prices and investors’ sentiment (in fact, there are clear signs that it already did).
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The Bid: $4 Billion to Takeover Getty Images
On Monday, April 24th, the investment company Trillium Capital LLC issued an open letter addressed to Getty Images, proposing to acquire the stock media agency at $10 per share in cash.
At the time, this offer is said to represent around $4 Billion and pretty much doubled the media giant’s stock price, which by then was a little over $5 per share.
This proposal, the investor firm stated, came with multiple conditions, including Trillium Capital’s Managing Partner and founder Scott Murray joining the Getty’s Board of Directors as Chairman, among other requirements.
While the offer might sound sudden, in context, it isn’t. Trillium Capital is said to own around 500,000 shares at Getty, and they have published open letters for the agency, ranging from advisory to urging tone and even requesting a seat on their Board in the recent past.
As Murray declared to Reuters, the reason to make the offer publicly was that they had submitted it privately, with no response.
Trillium Capital LLC defines itself as a “new kind of venture investment partnership” firm that focuses on bringing capital and executive and strategic directive advice to emerging companies in the tech and digital space. Essentially, they’re an activist investor firm.
Based in Boston and led by its founder Scott Murray, they are said to have a team of partners with decades-long experience directing and operating successful businesses.
According to a report by Reuters, Trillium has never made a major acquisition such as this before. However, in 2011 they attempted to buy Stream Global Services –a company Murray had previously founded and sold– but they were unsuccessful.
On Tuesday, April 25th, Getty Images responded to the public takeover bid in an equally public way via a statement where they declared that the company’s Board and its advisors couldn’t find “any evidence that [Trillium Capital LLC], its managing partner, or its non‑binding, highly conditional proposal are sufficiently credible” as to be considered, and therefore declined it.
In the same communication, they remarked that they remain certain the agency’s current management team and business strategy are the right way going forward –not a minor detail considering Trillium’s history of calling out Getty to change its direction.
According to Bloomberg, the immediate result from this two-day story was seen in Getty Images’ shares price, which went up by over 60% after the offer was published, but quickly went back down and settled at a lower price point.
Some think that this kind of move could also reflect in shareholders’ sentiment and behavior in the near future, although it would seem the majority of them were equally skeptical as the Board.
As of today, Wednesday, April 26th, Getty Images remains in the hands of its main shareholders, the Getty Family and Koch Industries.
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