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Getty Images accepts buyout

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Bloomberg News / February 26, 2008

NEW YORK - Getty Images Inc., the largest provider of photographs to publications and advertising agencies, agreed to be bought by private equity company Hellman & Friedman LLC for $2.1 billion.

Getty Images stockholders will get $34 a share, or 39 percent more than the Seattle-based company's Feb. 22 closing price of $24.45. Hellman & Friedman will also assume $305 million in debt, Getty spokeswoman Bridget Russel said.

Hellman & Friedman agreed to pay for Getty with 50 percent equity to overcome banks' resistance to financing transactions with too much debt. Cofounders chief executive Jonathan Klein and chairman Mark Getty, the grandson of oilman J. Paul Getty, put the company up for sale in January after the traditional imagery unit lost business to Internet competitors offering lower-resolution photos.

"It looks like a fair valuation," said Malindi Davies, an analyst at Oppenheimer & Co. who recommends holding the shares. "Problems in the credit markets were slowing this down, so it was definitely good news to see that the company was able to figure out a way to finance it."

Getty jumped $7.22, or 30 percent, to $31.67 in New York Stock Exchange composite trading. Before yesterday, the stock had gained 11 percent since Getty said in January that it hired Goldman Sachs Group Inc. to help it explore financial options. In 2007, the stock slumped 32 percent.

Turmoil in the credit markets has made banks more cautious about lending to private equity firms in recent months. Wachovia Corp. sued Providence Equity Partners last week to try to get out of financing its purchase of Clear Channel Communications Inc.'s television stations.

Getty Images has clients in more than 100 countries, including New York's Interpublic Group of Cos., the second-biggest US advertising company. Customers pay to download pictures from Getty's website, which receives 4 million unique visitors each month.

The company reported this month that profit fell 7.7 percent in the fourth quarter on investments in new businesses such as lower-resolution images and music licensing. Sales rose 7.1 percent to $218.1 million. Without the benefit of currency fluctuations, revenue increased 1 percent.

Getty has forecast earnings of $2 to $2.10 a share this year on sales of $900 million.

Klein said the company will invest in its multimedia, video, music licensing, and user-generated content businesses.

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