Adobe, Figma Scrap $20 Billion Acquisition -- Update

By Dean Seal

Adobe has called off its planned $20 billion acquisition of the collaboration-software company Figma, weeks after international regulators warned that the deal would likely harm competition.

Adobe and Figma said Monday morning that they have mutually agreed to terminate the cash-and-stock transaction because they couldn't see a clear path to receiving regulatory approval from the European Commission and Britain's Competition and Markets Authority.

The U.K. agency late last month said that, following a detailed investigation, it provisionally found the acquisition would eliminate competition between two main companies in product-design software, reduce innovation and remove Figma as a threat to Adobe's flagship Photoshop and Illustrator products.

The European Commission aired similar concerns in November and gave Adobe a chance to respond to its objections.

Adobe Chief Executive Shantanu Narayen said Monday that the companies strongly disagree with the recent regulatory findings but "believe it is in our respective best interests to move forward independently."

The companies have signed a termination agreement that requires Adobe to pay Figma a $1 billion termination fee.

Adobe agreed to buy Figma, a maker of so-called collaborative interface tools, in September 2022. The acquisition would have been the largest yet for the Silicon Valley software giant known for its common workplace tools and PDF files.

The deal, which would have cost Adobe the equivalent of about the last three years of its combined free cash flow, surprised Adobe's investors. It also drew criticism from some Figma users over concerns that the acquisition would slow innovation and lead to price changes.

The U.K. Competition and Markets Authority, whose profile had been rising after it initially rejected Microsoft's since-completed $75 billion acquisition of Activision Blizzard a month earlier, said in May that it would investigate whether the Figma purchase would result in a "substantial lessening of competition within any market or markets in the United Kingdom for goods or services."

The U.K. competition regulator stepped up its investigation in late June before disclosing its provisional findings in late November.

In August, the European Union's antitrust enforcer opened its own in-depth investigation into the proposed acquisition. The European Commission said a preliminary probe indicated the transaction might reduce competition in the global markets for interactive product design software and digital asset creation tools.

The E.U. watchdog formally objected to the deal last month, saying it could significantly imperil competition for the supply of interactive product design tools and of vector and raster editing tools.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

December 18, 2023 09:24 ET (14:24 GMT)

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