Key Takeaways Getty Images and Shutterstock are teaming up in what Getty called a merger of equals.The deal between the two providers of stock images and video is designed to meet the changing needs of the creative,

The giant commercial photo and video providers are grappling with the emergence of artificial intelligence tools that have flooded the internet with AI-created images.

Getty Images and Shutterstock will merge into one company valued at $3.7 billion in a deal that aims to take on competition from AI, the companies announced on Tuesday. The new premier visual content company will be called Getty Images Holdings, Inc. and at close, Getty Images’s CEO, Craig Peters, will serve as CEO of the combined company.

Getty Images is buying Shutterstock to create a $3.7 billion visual content company. The merger comes at a time when companies that use still images are facing increased competition from images generated by artificial intelligence.

Getty Images already works with more than half a million content creators around the globe and serves customers in nearly every country. The outlet, which also

Getty Images (GETY) and Shutterstock (SSTK) to merge in a $3.7 billion deal, creating a visual content powerhouse with enhanced product offerings

Getty says that the merger will allow for a larger investment in “innovative content creation,” including generative AI, search, and 3D imaging. Both Getty and Shutterstock currently have built-in generative AI tools, labeled as safe for commercial use.

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 49% higher in recent premarket trading.

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.