Private equity to buy Getty Images for $2.1 bln

By Paul Thomasch

NEW YORK (Reuters) - Getty Images Inc GYI.N said on Monday it had agreed to a takeover bid of $2.1 billion from Hellman & Friedman, putting the struggling photo and video supplier in the hands of a private equity firm.

The deal, which comes about five weeks after Getty said it would look at strategic alternatives, is worth $34 a share for stockholders. That is a premium of 55 percent over Getty's closing price on January 18, when it announced that it had hired Goldman Sachs as an adviser and could be up for sale.

Getty's board has approved the takeover, and the deal is expected to close in the second quarter. Including Getty debt to be assumed by the buyer, the deal is worth $2.4 billion.

The move follows 12 months in which Getty's shares have dropped 50 percent and it has faced a slowdown at its core rights-managed pictures business. The shares were up 29.9 percent to $31.75 in Monday afternoon trade on the New York Stock Exchange.

Getty, based in Seattle, was built through a series of acquisitions of stock photography houses in the 1990s, and began supplying media companies with pictures to use in advertisements and magazines. It also began selling news, sports and entertainment photos and video.

But a shift of advertising to the Internet and the growth of text-only paid-search advertisements led to a decline in volume for Getty's rights-managed still pictures. Getty also faced competition from discount Web sites offering pictures.

To offset slowing revenue growth, the company cut jobs and consolidated offices. For the fourth quarter, net profit fell 7.8 percent to $28.5 million, or 48 cents per share.

"The overall systemic issues around less print advertising, more online communication, and significant amount of spend on text-based search, which we hate because it does not have pictures, is not going to change because our ownership changes," Jonathan Klein, co-founder and chief executive officer of Getty Images, said in an interview.