Figma acquisition by Adobe abandoned for $20 billion
In a dramatic turn of events, Adobe and Figma have officially called off their highly anticipated merger, a deal valued at a staggering $20 billion. The termination comes in the wake of mounting pressure from regulatory bodies in the UK and the European Union. The decision was announced jointly on Monday, with both companies expressing their continued belief in the strategic advantages and procompetitive benefits of the proposed union.
The ambitious acquisition faced fierce scrutiny from regulators, who raised concerns about Adobe’s near-monopoly in the design software market. The regulatory pushback stemmed from fears that Adobe’s absorption of Figma, a rapidly growing product design platform surpassing Adobe’s own XD application in popularity, would stifle innovation in the industry. Designers had echoed these worries since the merger’s announcement in September 2022, but Adobe had consistently contested these claims throughout the ongoing investigations.
The UK’s Competition and Markets Authority (CMA) had proposed remedies to approve the merger, including significant divestments of assets, source code, and engineers to restore competition conditions. However, Adobe rejected these suggestions in a letter dated December 14th, intensifying the regulatory standoff. A final decision on the acquisition was expected by February 25th, with discussions scheduled for December 21st.
Simultaneously, the European Commission was scrutinizing the deal, and reports surfaced that the US Department of Justice (DOJ) was preparing similar investigations. In the face of this regulatory quagmire, Adobe and Figma decided to mutually terminate the agreement to avoid prolonged legal battles and uncertainty.
Also Read | Popular AI tools are now available on the web Adobe Photoshop
Regrettably, the termination triggers a $1 billion reverse termination fee payable by Adobe to Figma in cash. Despite both companies expressing disagreement with regulatory findings, they concluded that proceeding independently was in their best interests.
Adobe’s Chair and CEO, 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.”
Figma’s CEO, Dylan Field, lamented the outcome, saying, “It’s not the outcome we had hoped for. Despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal.”
Also Read | Adobe AI push introduces new image-creation tools
The termination of this high-profile deal underscores the challenges that mega-mergers face in navigating complex regulatory landscapes, and it leaves both companies to chart their independent paths in the evolving landscape of digital design and creativity.
