(Reuters) -Getty Images said on Tuesday it would merge with rival Shutterstock to create a $3.7 billion stock image powerhouse geared for the artificial intelligence era, in a deal that would likely draw antitrust scrutiny.

The move comes at a time when the licensed visual content industry is facing threats from generative AI tools such as Midjourney and OpenAI's DALL-E, which can generate images and video in response to a simple text prompt from users.

Under the deal, Shutterstock shareholders can opt to receive either $28.80 per share in cash, or 13.67 shares of Getty Images, or a combination of 9.17 shares of Getty and $9.50 in cash for each Shutterstock share they own.

Shutterstock's shares jumped 26.5% in premarket trading, while Getty Images was up 50.2%. Stocks of both the companies have declined for at least the past four years, as the rising use of mobile cameras drives down demand for stock photography.

The deal will help the companies in enhancing "content offerings, expanding event coverage and delivering new technologies", said Craig Peters, CEO of Getty Images.

Peters will serve as the CEO of the combined company, of which Getty Images investors will own about 54.7% and Shutterstock stockholders will own the rest.

Getty competes with Reuters and the Associated Press in providing photos and videos for editorial use.

The deal is expected to generate between $150 million and $200 million in annual cost savings by the third year of the combined company.

It will be named Getty Images Holdings and will continue to trade on the New York Stock Exchange under the ticker symbol "GETY".