Getty Images, Inc. (NYSE: GYI) shares spiked nearly 15 percent today after the company announced that it would explore strategic alternatives, including a potential sale of the company. The digital photo service is reportedly asking for $1.5 billion – or $25 per share – and has many analysts speculating as to whether a potential buyer would even be able to obtain financing in this environment. Shareholders are hoping that the move could draw bids from two private equity firms that are reportedly interested.

Getty Images hired Goldman Sachs as its advisor in a process that is set to end by the end of the month. The move comes after the firm’s shares have declined more than 45 percent over the last year due to competition from low-cost rivals. Currently, Getty Images owes most of its growth to recent acquisitions like iStockPhoto.com, which is expected to bring in $83 million in 2008 alone – not bad for a company they bought for $50 million in 2006! The company has also engaged in cost-cutting measures designed to increase its attractiveness, including layoffs amounting to 5 percent of its workforce.

Interestingly, the $1.5 billion asking price would only be an 11 percent upside to the company’s $1.36 billion enterprise value (market cap plus debt less cash). This has some shareholders and analysts concerned that the company is not asking for enough. The attractive valuation has also apparently piqued the interest of Bain Capital – a firm founded by presidential candidate Mitt Romney – and the famous Kohlberg Kravis Roberts (KKR), who are reportedly mulling a bid.

Overall, this is a strong company that is waning slightly in today’s troubled markets. Whether or not any of the discussions will result in a bid remains to be seen, but this is definitely a stock worth following in the meantime!

Related Companies
Jupitermedia Corporation (JUPM)
Google Inc. (GOOG)
Hydrotech International (HTI)