Getty Images and Shutterstock announced that the companies will merge and create a $3.7 billion 'premier visual content company.'

Visual content companies Shutterstock and Getty Images will join to become a $3.7 billion visual content company.

Shutterstock are joining forces in a merger valued at around $3.7 billion, the companies announced on Tuesday. The merger will allow the companies to expand their stock photo libraries as they face increasing competition from AI-powered image creation tools.

Getty Images Holdings Inc. agreed to acquire rival stock-photo provider Shutterstock Inc. in a deal that would create a combined company worth about $3.7 billion including debt.

We warn of disruption in the stock photo market as Getty Images and Shutterstock plan a risky merger with potential drawbacks. Read more on GETY and SSTK here.

In total, Getty expects to pay $331 million plus 319.4 million shares of its stock to acquire Shutterstock. At today's share price, that works out to a valuation of about $1.35 billion on Shutterstock, or about 7% more than what Shutterstock costs after today's price spike.

Getty Images is the bigger company of the two, and its shareholders will own approximately 54.7% of the new entity, while Shutterstock shareholders will own 45.3%. Getty Images also owns the iStock and Unsplash brands. The company will simply be called Getty Images.

The deal, presented as a merger of equals, will create a company worth $3.7Bn with annual revenue of around $2Bn.

Shares in Getty Images and Shutterstock surged after the image companies agreed to merge, creating a group worth about $3.7 billion including debt. Getty stock stood about 25% higher Tuesday morning.

Getty Images CEO Craig Peters will oversee the company formed following Getty's mergers with Shutterstock. (Getty Images Photo) Seattle's Getty Images is

The two big players in the licensed visual content will pair up to counter threats from artificial intelligence tools like Midjourney.