Adobe Inc. walked away from its $20 billion acquisition of startup Figma Inc. after clashing with regulators in Europe and the UK.
dobe Inc. walked away from its $20 billion acquisition of startup Figma Inc. after clashing with regulators in Europe and the UK.
Adobe will pay Figma a $1 billion termination fee,the companies said in a statement on Monday. They saw “no clear path” to getting regulatory approvals from the European Commission and the UK’s Competition and Markets Authority.
Adobe,the dominant force for years in such creative software as Photoshop and Illustrator, announced the purchase of Figma in September
2022.
But regulators in multiple jurisdictions said the deal was another example of a tech incumbent snuffing out a nascent competitor. UK regulators suggested drastic remedies to clear the deal, which Adobe rejected. US regulators, meanwhile, were preparing a lawsuit to block the acquisition earlier this year.
Both companies “strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” AdobeChief Executive Officer Shantanu Narayen said in the statement.
Adobe shares gained 2.2% in New York on Monday morning. “No Figma, No Problem,” was the title of a note by Evercore ISI analyst Kirk Materne.Adobe is in a much stronger position now than when the deal was announced due to its investments in generative artificial intelligence, Materne said, and walking away from the deal frees up cash for share buybacks.
Bloomberg Intelligence’s Anurag Rana said the termination “doesn’t changeAdobe’s dominant position in the creative software market.”
For more: Adobe Is Focused on AI Rather Than Figma With Acquisition in Limbo Wall street analysts have always been lukewarm on the deal due to its high price tag.
While Figma would have helped Adobe reach new users, some saw the valuation as revealing severe competitive pressures.
The creative software giant previously tried to buy Figma in 2020 and 2021 as the startup rapidly gained steam, according to a filing with details on how the merger came together.
Eventually, Figma accepted an offer double its valuation at a time when many peers were seeing decreases.
Figma is mainly used for designing app or website interfaces. It trounced Adobe’s competing XD product in recent years, which is now being phased out by the company.Adobe has argued the deal isn’t anticompetitive because Figma doesn’t make tools that compete with its important products like Photoshop, which is used for photo editing, or Premiere, which is used for cutting video.
