Two federal regulatory agencies have given the Jupiter-Getty merger the okay to move ahead, Jupiter said in a statement December 8. The deal is expected to close in early 2009.
Also, in paperwork filed December 4, Jupitermedia revealed that four other buyers expressed serious interest in its imaging division this year.
The documents show that the collapsing credit markets left Jupiter with so little leverage that Getty was able to cut its initial bid in half. The secret talks with Getty were well underway when the stock market plunged in early October, sending Jupiter’s share price to record lows.
How the deal unfolded
The history between Getty and Jupiter dates to December 2006, when the two companies first discussed a potential sale of Jupiterimages. By March 2007, Getty and Jupiter had hammered out a tentative deal for Getty to buy Jupiterimages for $388 million. The deal collapsed before it could be finalized.
Over the following 14 months, Jupiter’s imaging division struggled to grow, as stock image customers became accustomed to lower prices, and spent less to license images for use online than they had for use in print.
Four other potential buyers also made bids for Jupiterimages after the first Getty deal collapsed; none are named in the filing.
In May 2008, Jupitermedia contacted private equity firm Hellman & Friedman, which was in the process of acquiring Getty Images. Getty also was struggling with a tough market for royalty-free and rights-managed stock photos. Talks between the companies resumed. In early discussions, Hellman & Friedman suggested the deal would be worth about $200 million.
The interest from other bidders could have been good for Jupiter, but the credit crisis made a sale difficult. One bidder said their private equity sponsor had backed out. Another bidder, which had been prepared to pay $90 million, said it was having trouble with funding and offered to buy only the rights-managed division of Jupiterimages for somewhere between $2 million and $9 million.
On September 24, Jupitermedia CEO Alan Meckler and Getty Images CEO Jonathan Klein exchanged several emails and text messages. Klein proposed a purchase price of $120 million, citing the state of the credit and acquisition finance markets.
The next day, Getty representatives spoke to Jupitermedia’s financial team about the company’s July and August results.
Over the next two weeks, the scope of the credit crisis became apparent and stocks plunged. On October 6, Jupitermedia’s stock closed below $1 for the first time since September 2001.
