Getty Images Shares Rise on Buyout Talk
Shares of Getty Images Inc. soared Tuesday after the seller of stock photography and video footage acknowledged it is exploring strategic alternatives and said it retained Goldman Sachs as a financial adviser.
Investors sent the stock up $2.81, or 12.8 percent, to close at $24.75.
"While the evaluation process, including discussions with various interested parties, is ongoing, there can be no assurance that any transaction will occur," the company said in a statement.
The New York Times on Monday reported that the company is in play, with interest from private equity groups including Kohlberg Kravis Roberts and Bain Capital. Getty Images could fetch as much as $1.5 billion, according to the report. A spokeswoman declined to comment.
Getty Images, founded in 1995, posted a profit of $130.4 million in 2006, more than 10 times that of its closest publicly traded competitor, Jupitermedia Corp. But the company's stock plunged in August after cutting guidance for the fiscal year, and has stayed depressed since then, finally hitting a five-year low of $21.80 last week.
In a note to investors, Lehman Brothers analyst Caroline Sabbagha said the company is worth more than $1.5 billion, but potential buyers may have problems raising money, given the credit crunch in the U.S.
"While a potential sale of the company provides a near-term catalyst for the stock, we believe that if the near-term issues facing Getty are not more serious than we think, then the company has a business that is viable as a standalone entity longer term that is likely to be worth more," she wrote.
The analyst maintaned an "Equal Weight" rating and $31 price target on the stock.
Getty Images is set to report fourth-quarter earnings for 2007 on Jan. 31.
Copyright © 2008 The Seattle Times Company
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