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 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.

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 Holdings and Shutterstock have agreed to merge into one visual-content company with an enterprise value of about $3.7 billion. Shares of both companies jumped on the announcement.

The merger comes at a time when companies that use still images are facing increased competition from images generated by artificial intelligence.

Getty Images Holdings Inc. is exploring a merger with rival Shutterstock Inc., according to people familiar with the matter.

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.

The companies said Tuesday that they have complementary portfolios and that a merger will provide customers with a broader array still imagery, video, music, 3D and other media.

The deal will marry Seattle-based Getty Images' immense library of photos, illustrations and videos with Shutterstock's searchable platform that lets contributors upload content.,