Adobe and Figma, a cloud-based design tool, have decided to cancel their planned $20 billion merger due to challenges in obtaining necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority. The decision was announced in a joint statement where both companies expressed disagreement with recent regulatory findings but believed it was in their best interests to move forward independently.
Adobe’s shares rose approximately 1.8% in pre-market trading following the news. The CEO of Adobe, Shantanu Narayen, stated, “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.”
The planned acquisition, announced in September 2020, was initially valued at around $20 billion in a cash-and-stock deal. However, regulatory hurdles in Europe and the UK posed challenges to the companies’ vision. Adobe will pay Figma a $1 billion breakup fee, as disclosed in a regulatory filing.
The termination of the merger marks a shift from Narayen’s recent remarks supporting the acquisition. Just last week, he expressed belief in the deal’s benefits for consumers, emphasizing the potential to combine Figma’s collaborative software with Adobe’s creative capabilities. However, he acknowledged the challenging regulatory environment.
Increasingly, antitrust regulators have scrutinized tech deals, both large and small. Earlier this year, Meta sold Giphy to Shutterstock for $53 million after the UK’s competition watchdog cited potential anti-competitive effects. The UK Competition and Markets Authority has also been reviewing Microsoft’s investment in OpenAI.
In a joint statement, Figma CEO Dylan Field acknowledged the regulatory challenges, stating, “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.”
Despite the canceled merger, both companies expressed their commitment to finding ways to collaborate and delight their joint customers. David Wadhwani, a senior vice president at Adobe, wrote in a blog post, “We will continue to look for ways to partner with Figma to delight our joint customers.”
After an intense 15 months of review, today Adobe and Figma have decided to end our pending merger, as we no longer see a path toward regulatory approval of the deal.https://t.co/sHuUsW9sR2
— Dylan Field (@zoink) December 18, 2023
