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Adobe’s $20 Billion Acquisition Of Figma Called Off!

By TechDogs Bureau

TD NewsDesk

Updated on Wed, Dec 20, 2023

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Back in September 2022, Adobe announced their intention to acquire their rival, Figma.

Although the process wasn’t smooth, a deal was initially struck for $20 billion and all seemed fine. While the agreement was locked in place by the two parties, there was another hurdle.

This came in the form of antitrust agencies and regulatory bodies such as the Competition and Markets Authority (CMA) from the UK, the European Commission in Europe and the Department of Justice in the US.

Recently, antitrust agencies also raised concerns about Microsoft’s involvement in OpenAI.

After more than a year of closely dealing with the agencies, both parties now have a new announcement regarding the acquisition. Essentially, the deal was called off!

The question is why did that happen and what happens with both companies now? Let’s explore!
 

Why Was The Acquisition Deal Called Off?

 
  • In an announcement made by both companies, Adobe and Figma conveyed that they entered into a mutual agreement to terminate their previously announced acquisition deal.

  • The $20 billion deal, which was announced on September 15, 2023, consisted of a mix of cash and stock consideration. At the time it was announced, Adobe’s shares plummeted. After the latest announcement, Adobe’s stock rose 0.6% on Monday.

  • While both companies believe in the merits and procompetitive benefits of the deal, the issue comes as the UK’s CMA and the European Commission have objections to the transaction, as it would hamper competition and innovation for software.

  • As such, a joint assessment by Adobe and Figma led to the companies saying “There is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.”

  • As a result of signing the termination agreement, Adobe will be required to pay its competitor, Figma, the agreed termination fee of $1 billion, as conveyed by an official filing by Adobe.

  • Yet, David Wadhwani, President of Digital Media Business at Adobe is confident that the two companies will work together at some point in the future, saying in a blog post, “Through this process, it has been a pleasure to get to know Figma’s employees and their community. We will continue to look for ways to partner with Figma to delight our joint customers.”

   

What Did The Stakeholders Say?

 
  • Shantanu Narayen, Chair and CEO, Adobe, said, “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently

  • [Contd.] While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences.”

  • Dylan Field, Co-founder and CEO, Figma, said, “Going through this process with Shantanu, David and the Adobe team has only reinforced my belief in the merits of this deal, but it’s become increasingly clear over the past few months that regulators don’t see things the same way.”

  • [Contd.] “While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe.”

  • David Wadhwani, President of Digital Media Business, Adobe, said, “Figma has built an incredible product design platform, and I am confident in their continued innovation and growth after spending more than a year with their team and community … I have been impressed with Dylan and his incredible team at Figma and will look for ways to partner to delight joint customers in the future.”
 
Do you think the antitrust agencies are correct in opposing the Adobe-Figma deal citing the need to maintain competitiveness in the industry?

Let us know in the comments below!

First published on Wed, Dec 20, 2023

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