According to a Tuesday regulatory filing, Getty Images announced it was terminating its deal to acquire Shutterstock because it refused to satisfy a requirement from the UK's Competition and Markets Authority for merger approval. That regulator demanded that Shutterstock divest its editorial operations to prevent restricting options for UK media companies. In the filing, the board stated that it "unanimously resolved not to proceed with the process to sell Shutterstock's editorial business under the supervision of the CMA" and said it would terminate the merger agreement.
That decision sent a ripple through the bond market. The $628.4 million bond, issued in October last year at a 10.5% interest rate, had been trading below its face value. The deal's collapse meant Getty would redeem the notes early, paying bondholders full face value plus accrued interest.
The first coupon on these notes was paid in May.
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Bond prices typically climb when early redemption is announced because investors are guaranteed principal plus accrued interest, removing the risk of market fluctuations or default. The 14‑cent gain reflected that confidence, as the note moved from roughly 84 cents to nearly 98 cents. Because the bonds are senior secured, holders had an added layer of protection, making the redemption all but certain once the merger fell apart.
Bonds often trade below face value when investors perceive higher risk, such as uncertainty over a merger or the company's ability to service its debt. The 10.5% coupon on these notes reflected that elevated risk. Once the deal collapsed and early redemption was confirmed, the bond's price surged to near par, rewarding holders who had purchased at a discount. This rally illustrates how a guaranteed repayment eliminates default and market risk for bondholders.
Getty also had $300 million senior unsecured notes due in 2027. Previously, Getty had swapped the majority of those bonds to push their due date out by 12 months, ensuring no debt came due before 2028. Those notes are not being redeemed.
The company plans to buy back the 10.5% senior secured notes maturing in 2030, which were originally issued to finance the purchase. The unsecured notes will remain in the market. Investors will watch whether Getty can manage its debt without the Shutterstock deal.
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