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Getty Images buys competitor for $220 mln

    Image-provider Getty Images, Inc. (Nasdaq: GETY) said Monday it will buy its largest competitor, Visual Communications Group (VCG), from Britain's United News & Media PLC (Nasdaq: UNEWY) for about $220 million.

    Shares in Getty Images, which has vertical portals that allow customers to access and purchase images, recently announced results for fourth quarter of 1999, which, driven by increasing e-commerce efforts, saw sales exceed expectations, though losses widened.

    The addition of VCG strengthens Getty Images' leadership in the visual content industry in terms of e-commerce revenue, customer base, global distribution capacity, brands, profitability and depth and breadth of content, the company said.

    The acquisition will be financed through a secondary offering by Getty Images, also announced Monday. The acquisition of VCG is expected to be immediately accretive to EBITDA, or earnings before interest, taxes, depreciation, and amortization, as well as cash earnings per share.

    VCG's core brands will be incorporated into Getty Images' gettyone channel, targeting the creative professional market. Following the acquisition, Getty Images will have over 70 million images and more than 27,000 hours of footage.

    "As VCG is an almost entirely analog company, we intend to use our e-commerce expertise to accelerate its growth rate in much the same way that we have accelerated growth in our Tony Stone Images brand by bringing it online,'' said Jonathan Klein, co-founder and CEO of Getty Images. The growth rate of Tony Stone Images of more than 30 percent in the fourth quarter of 1999 was largely due to e-commerce.

    VCG consists primarily of four major brands, licensing imagery in separate geographic regions: Telegraph Colour Library in the United Kingdom, FPG in the United States, Bavaria Bildagentur in Germany and Pix in France. VCG also distributes its imagery in other markets through third party agents.