Adobe and Figma, a design tool on the cloud, have decided to cancel their planned $20 billion merger due to challenges from regulatory authorities, as announced on Monday.
In their statement, the companies mentioned that they don’t see a straightforward way to get the required approvals from the European Commission and the UK Competition and Markets Authority.
“Despite disagreeing strongly with the recent regulatory findings, Adobe and Figma have decided that it is in their best interests to go their separate ways,” stated Shantanu Narayen, CEO of Adobe. He continued, “While both companies had a shared vision to reshape the future of creativity and productivity, we believe that each of us can independently make the most of significant market opportunities. Our mission to make a positive impact on the world through personalized digital experiences remains unchanged.”
Adobe and Figma Merger, The $20 Billion Deal Changes
In September 2020, Adobe initially revealed its plan to buy Figma in a deal valued at approximately $20 billion, involving both cash and stock. This announcement led to a drop in Adobe’s shares. However, the company insisted that acquiring Figma would naturally enhance Adobe’s portfolio, stating in the original announcement that the partnership would bring about a new phase of collaborative creativity.
As part of the cancellation, Adobe will provide Figma with a breakup fee of $1 billion, as mentioned in a regulatory filing.
This announcement represents an abrupt change from Narayen’s recent statements. Just on Wednesday, he expressed confidence in the acquisition and its positive impact on consumers.
Narayen shared, “We aim to merge Figma’s accomplishments in web-based collaborative creative software with Adobe’s expertise in creativity, making it more accessible for everyone. We see it as a complementary area, truly believing in the merits of the case, but the regulatory landscape presents challenges.”
Antitrust regulators are now closely examining various technology deals, both large and small. In May, Meta sold Giphy to Shutterstock for $53 million due to concerns raised by the U.K.’s competition watchdog about potential anticompetitive effects, three years after Meta initially acquired it. The Competition and Markets Authority (CMA) is also reviewing Microsoft’s investment in OpenAI.
In the joint statement released on Monday, Figma CEO Dylan Field expressed his continued belief in the merits of the deal after going through the process with Shantanu, David, and the Adobe team. However, he acknowledged that in recent months, it has become increasingly apparent that regulators do not share the same perspective.
David Wadhwani, a senior vice president at Adobe, mentioned in a separate blog post, “We will continue to explore opportunities to collaborate with Figma to bring joy to our shared customers.” Moreover, in the recent month Figma introduced FigJam AI, a set of new AI tools.
Conclusion
Adobe and Figma cancel their $20 billion merger due to regulatory hurdles, despite initially believing in its benefits. This abrupt change follows CEO Narayen’s earlier confidence. The decision includes a $1 billion breakup fee for Figma. Amidst increased antitrust scrutiny, Figma’s CEO remains optimistic, while Adobe explores future collaborations despite the setback.
