How Credit Crunch Shaved At Least $45 Million Off Jupiterimages’ Sale To Getty Images

When Jupitermedia (NSDQ: JUPM) sold off its online images business to its larger rival Getty Images (NYSE: GYI) for $96 million in October, some people considered it second-time lucky for the company: Jupiter tried to sell its whole business to Getty in early 2007, but it fell apart then. But the latest sale was not without hitches, and in fact the credit crisis that ballooned in September-October may have shaved almost $40 million to $45 million off the final deal price, based on the deal proceedings disclosed in JUPM’s PREM14A filing late last week. And while the back and forth is hard to summarize, some key points:

— Back in March 2007, when the first talks were held, Getty discussed buying its images business for about $388 million, but the talks were terminated soon after.
— A year later, talks started again with Getty as well as three or four other bidders. And in April this year, a bidder came in with “verbal non-binding indication of interest” to acquire the images business for approximately $185 million, the filing discloses.
— Merrill Lynch was retained as the banker from Jupitermedia’s side; they approached Getty again after two other parties became interested. Around May, Hellman & Friedman Advisors, the PE firm that was in the process of buying Getty, indicated a deal could be done around the $200 million range.
— Tons of back and forth among all bidders and JUPM over the next few months. JUPM had a chance to potentially sell the business at around $145 million to Getty if it entered into a 45-days exclusivity period starting early August, but it didn’t, and continued talking to others. Some bidders wanted to buy pieces of the images business for between $65 million and $90 million…some of these deals were also contingent on the bidders getting funding from other PE firms.
— As the market continues to worsen, the bid price went lower, on Sept. 24, Jonathan Klein, CEO of Getty Images, communicated to Meckler that they were reducing the price to $120 million, “based on the state of the credit and acquisition finance markets.”
— On Oct 16, Getty went as low as $75 million, “citing difficulty in securing borrowed funds under Getty Images