After UK antitrust order, Meta sells Giphy to Shutterstock for $53m after buying it for $400m

Image credits: SOPA Images / Contributor

Meta has finally found a willing buyer for Giphy, the animated GIF search engine it acquired for $400 million three years ago.

Shutterstock announced today that it has entered into an agreement with Meta to buy Giphy in a deal “consisting of $53 million in net cash paid at closing,” meaning Facebook’s parent company only got 13% of its money back. Shutterstock said it expects the deal to close next month, as Meta has also signed a commercial agreement to continue access to Giphy content across its suite of products.

The announcement comes nearly seven months after the UK’s antitrust regulator issued a final order for Meta to sell Giphy, on the grounds that the merger reduced the dynamic competition. The Competition and Markets Authority (CMA) had originally ordered the sale in November 2021, but the appeals process has held things up for the better part of another year.

In October last year, Meta confirmed it would drop any further appeals and reluctantly agreed to offload Giphy, but the formal divestment process didn’t begin until the CMA issued its final order in January this year, giving Meta a set amount of time to sell. Its origins – TechCrunch was told that this was likely a six-month window, meaning the clock was ticking for Meta to close a deal.

The terms of the sale meant that Meta had to sell Giphy as a whole entity, rather than in pieces, and it had to find a legitimate buyer—a company that would keep Giphy as a GIF search engine. The CMA also had the final say on who Meta can sell Giphy to.

The Meta/Giphy takeover was brought to light again recently, after the CMA confirmed it was blocking Microsoft’s Megabucks takeover of Activision at the end of April, a decision made even more notable after the UK’s European counterpart in Brussels green-lighted the deal three weeks later. .

It’s clear that the UK has taken a tougher antitrust stance of late, and while Microsoft’s $68.7 billion bid for Activision is a very different boiler of fish – there are likely to be more twists and turns as the case winds its way through the appeals processes. The UK seems to be trying to make up for lost time after acquiring countless big tech companies through the regulatory approval process more or less without question.

GIF that keeps on giving

Shutterstock made it clear that acquisitions will play a major role in its roadmap in the near term, with Chief Financial Officer Jarrod Yahes saying last February that the company’s goal is to acquire It extends to different content types. So the UK Meta status with Giphy couldn’t come at a better time for Shutterstock, in terms of getting the chance to buy the popular GIF platform at a knock-down price.

In fact, Shutterstock was in a fairly strong negotiating position here. In most M&A scenarios, the seller would try to play as hard as possible to get the highest price, but in this case, any potential buyer knew Meta’s back was against the wall. Simply put, fire selling was always a likely outcome, especially given that Giphy has never been a strong business per se — its business value seems to be about helping existing platforms become more steadfast.

Tom Smith, a former CMA legal director who is now a partner at the London-based law firm Geradin Partners, said Meta’s predicament was of his own making.

“It was Facebook’s decision to complete the merger before obtaining permission from the Capital Markets Authority,” he said. The UK is somewhat unique in that companies are allowed to close mergers without regulatory clearance, Smith added, but it is clear that problems can arise ex post facto if the authorities decide to take a hard look at the deal.

“You can get your merger done, but the problem is that if you get your merger done, you run the risk that the CMA will start investigating after the fact,” Smith said. “And making life difficult for you by making you separate the two companies, and maybe at the end of it all, making you sell the company you just bought.”

Shutterstock has been making deeper moves into the realm of artificial intelligence lately, though the New York company’s bread and butter is still old-fashioned man-made stock photos. And it’s easy to see how GIFs fit into all of that. On the heels of today’s announcement, the company said the deal allows it to expand its content library to include GIFs and stickers for advertisers and brands, though it suggested it would also help it reach a market it hadn’t yet targeted — consumers. The company also said the deal helps it advance its “generative AI and metadata strategy.”

“With the acquisition of Giphy, we are expanding our audience touchpoint beyond primarily professional marketing and advertising use cases and expanding into informal conversations,” Shutterstock CEO Paul Hennessey said in a press release. “Giphy enables casual users to express themselves in memorable ways with GIF and sticker content while also enabling brands to be part of these informal conversations. We plan to leverage Shutterstock’s unique capabilities in content and metadata monetization, generative AI, and studio production and creative automation to enable marketing of our GIF library while rolling out this offering to customers.”

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