Carlyle Group LP (CG), the world’s second-largest private-equity firm, agreed to buy photo archive Getty Images Inc. from Hellman & Friedman LLC in a deal valued at $3.3 billion.
Carlyle will acquire a controlling stake in the company, while Getty co-founder and Chairman Mark Getty and the Getty family will roll “substantially all” of their ownership interests into the transaction, Washington-based Carlyle said today in a statement. Getty Images’ management, including co- founder and Chief Executive Officer Jonathan Klein, will also invest “significant equity” in the company, Carlyle said.
The price is less than the $4 billion that San Francisco- based Hellman & Friedman was seeking, a person familiar with the matter said yesterday. CVC Capital Partners Ltd., which was also bidding, declined to top Carlyle’s offer, according to the person, who asked not to be named because the talks were private. Hellman bought Seattle-based Getty Images, the No. 1 distributor of archived photos, for $2.4 billion four years ago and took out dividends of at least $950 million.
“We will harness Carlyle’s financial resources and global network to help take Getty Images to the next stage of product innovation and global growth,” Eliot Merrill, a managing director in Carlyle’s telecommunications and media group, said in the statement.
Private-equity managers have turned to other buyout firms to buy and sell companies as the IPO market slowed amid the European sovereign-debt crisis, weaker growth in Asia and concern about the U.S. fiscal deficit. So-called secondary sales are the second-most common method of exiting investments, after sales to strategic buyers, accounting for seven buyout deals during the second quarter, according to London-based researcher Preqin Ltd.
Getty Images, which was founded in 1995 by Getty and Klein, was the first stock-photo business to license images online, according to its website. Competitors include Seattle-based Corbis Corp., owned by Microsoft Corp. (MSFT) co-founder Bill Gates.
Carlyle will make the investment out of its Carlyle Partners V fund, a $13.7 billion pool that began investing in 2007. The fund had a net internal rate of return of 9 percent as of June 30, Carlyle said last week. Other investments in the fund include BankUnited Inc., Booz Allen Hamilton Inc. and HD Supply Inc.
Carlyle, which oversees 99 funds and 63 funds-of-funds, has been an active buyer. In the past month, the company agreed to buy a unit from United Technologies Corp. and a majority stake in TCW Group Inc., the $131 billion asset manager founded by Robert Day in 1971. Carlyle last month also committed $800 million to help finance Genesee & Wyoming Inc.’s purchase of RailAmerica Inc.
The purchases have helped Carlyle deploy about 80 percent of the capital from its flagship buyout fund, bolstering its pitch for fresh capital as it markets a successor pool. The firm closed on $2 billion of commitments to that pool in the second quarter, co-CEO David Rubenstein said last week. The new fund, Carlyle Partners VI, is targeting $10 billion.
Carlyle was advised by Debevoise & Plimpton LLP, and Getty Images was advised by Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Weil Gotshal & Manges LLP and Simpson Thacher & Bartlett LLP.
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