Technology
Monday, December 18th, 2023 3:10 pm EDT
Key Points
- Termination of $20 Billion Merger: Adobe and Figma have decided to terminate their planned $20 billion merger due to significant regulatory hurdles. The companies cited the absence of a clear path to obtaining necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority. This unexpected turn of events marks a departure from earlier optimism surrounding the merger.
- Disagreement with Regulatory Findings: Adobe and Figma express strong disagreement with the recent regulatory findings that led to the termination of the merger. Despite their shared vision to redefine the future of creativity and productivity through collaborative efforts, the companies believe it is in their respective best interests to move forward independently. The decision reflects the challenges posed by the regulatory environment, according to Shantanu Narayen, the CEO of Adobe.
- Financial Implications and Market Response: As a consequence of the terminated merger, Adobe will pay Figma a significant $1 billion breakup fee, as outlined in a regulatory filing. The market response to the news was notable, with Adobe shares experiencing a rise of around 1.8% in premarket trading on the day of the announcement. This financial repercussion and market reaction underscore the complexity and impact of regulatory scrutiny on major business deals in the tech industry.
Adobe and Figma, the cloud-based design tool, have announced the termination of their planned $20 billion merger, citing insurmountable regulatory hurdles from the European Commission and the UK Competition and Markets Authority. The decision was communicated through a joint statement where both companies expressed their disagreement with the regulatory findings but deemed it in their respective best interests to move forward independently.
The merger was first revealed in September 2020 when Adobe announced its intention to acquire Figma in a cash-and-stock deal. The deal, valued at approximately $20 billion, aimed to combine the strengths of both companies and usher in a new era of collaborative creativity. Despite the promising prospects highlighted in the initial announcement, the regulatory landscape posed challenges that ultimately led to the dissolution of the merger.
Shantanu Narayen, CEO of Adobe, conveyed the companies’ disagreement with the recent regulatory findings but emphasized their commitment to proceeding independently. He stated that while Adobe and Figma shared a vision to redefine the future of creativity and productivity, both companies remain well-positioned to capitalize on their market opportunities and pursue their mission of changing the world through personalized digital experiences.
The termination announcement resulted in a 1.8% rise in Adobe shares during premarket trading on the day of the news. Adobe disclosed that it would pay Figma a $1 billion breakup fee, as outlined in a regulatory filing. This fee is a significant financial repercussion of the failed merger and underscores the complexities involved in navigating regulatory scrutiny.
Narayen’s recent statements on the merger indicated a sudden pivot from his earlier optimism. In an interview with CNBC just days before the announcement, he expressed belief in the acquisition and its potential benefits for consumers. However, he acknowledged the challenging regulatory environment and the impact it had on the decision-making process.
The move to abandon the merger follows a trend of increased antitrust scrutiny on tech deals. Various regulators, including the UK Competition and Markets Authority, have closely examined deals for potential anticompetitive effects. In May, Meta sold Giphy to Shutterstock for $53 million after the UK competition watchdog raised concerns. The regulatory environment has also led to reviews of other tech investments, such as Microsoft’s investment in OpenAI.
In their joint statement, Figma CEO Dylan Field expressed disappointment in the regulatory outcome, emphasizing the continued belief in the merits of the deal. Despite the dissolution of the merger, both companies expressed the intention to explore future collaboration opportunities to benefit their joint customers. David Wadhwani, a senior vice president at Adobe, echoed this sentiment in a separate blog post, stating the companies would continue to seek ways to partner with Figma.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/18/adobe-and-figma-call-off-20-billion-merger.html
