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Adobe Scraps $20 Billion Figma Acquisition Amid Regulatory Hurdles

2023.12.19

 

Key Takeaways

  • Adobe cancels its planned acquisition of Figma due to regulatory challenges in the U.K. and EU.
  • The decision reflects increasing scrutiny of tech mergers by global regulators.

Adobe-Figma Deal Faces Regulatory Roadblocks

In a significant shift, Adobe has abandoned its ambitious $20 billion acquisition of Figma, a collaboration-software company. The decision, announced on Monday, was mutual, driven by the lack of a clear path to regulatory approval from the European Commission and the U.K. Competition and Markets Authority. This development is part of a growing trend of intensified regulatory scrutiny on tech mergers globally.

Regulatory Concerns and Termination Fee

The termination followed detailed investigations by the U.K. Competition and Markets Authority and the European Commission, which raised concerns about reduced competition and innovation in the product-design software market. Acknowledging these findings, Adobe CEO Shantanu Narayen emphasized the companies’ disagreement with the regulators but prioritized moving forward independently. As part of the termination agreement, Adobe is required to pay a $1 billion fee to Figma.

Market Reaction and Adobe’s Strategic Shift

Adobe’s stock experienced a slight increase following the announcement, possibly due to relief over the withdrawal from the costly deal. Despite a recent dip in shares after a weak revenue outlook, Adobe has seen a significant rise in stock value this year, buoyed by its integration of AI into its product offerings. The cancellation marked a strategic shift for Adobe, which had initially sought to enhance its web-based collaboration tools through the acquisition.

Adobe’s AI Focus and Figma’s Growth

Since the deal’s inception in September 2022, Adobe has shifted focus, strengthening its AI capabilities with tools like the image generator Firefly. Analysts noted that Adobe’s position has evolved, with a stronger emphasis on AI for content creation. Figma CEO Dylan Field expressed a preference for acquisition completion but highlighted the company’s growth and employee expansion since the deal announcement.

Global Regulatory Landscape

The Adobe-Figma saga underscored a tighter global regulatory environment for technology acquisitions. The U.K. Competition and Markets Authority has gained prominence with its interventions in major deals, including Microsoft’s acquisition of Activision Blizzard, which required significant modifications. The European Commission’s objection to the deal reflects a broader concern about competition in the tech sector.

Future Prospects for Adobe and Figma

While the aborted deal would have been a landmark acquisition for Adobe, the company continues to lead in AI-driven content curation. Figma, having grown its workforce and business, is facing the possibility of revisiting its public listing plans, a direction it had initially considered before market conditions turned unfavorable.

 


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