In a surprising turn of events, Adobe and Figma have decided to abandon their proposed $20 billion merger due to challenges in securing regulatory approvals from the European Commission and the UK Competition and Markets Authority. The companies stated that there is “no clear path” to receive the necessary regulatory clearances.
Adobe shares experienced a 1.8% increase in pre-market trading following the announcement. Despite both companies strongly disagreeing with the regulatory findings, they believe it is in their best interests to move forward independently.
Shantanu Narayen, CEO of Adobe, expressed the company’s shared vision to redefine the future of creativity and productivity. However, they are confident in their ability to capitalize on individual market opportunities and continue their mission to revolutionize the world through personalized digital experiences.
This decision marks a shift from Adobe’s earlier commitment to the acquisition, which was first announced in September 2020. The cash-and-stock deal, valued at around $20 billion, had initially caused a drop in Adobe’s stock price. The merger was positioned as a natural complement to Adobe’s portfolio, to usher in a new era of collaborative creativity.
As part of the termination agreement, Adobe will pay Figma a $1 billion breakup fee, according to regulatory filings. This unexpected development comes after Adobe’s CEO, Shantanu Narayen, reiterated the company’s belief in the merits of the acquisition and its benefits for consumers just days before the decision was made public.
Antitrust regulators have been increasingly scrutinizing tech deals, and this termination adds to a growing list of instances where regulatory concerns have impacted major transactions in the industry. Both Adobe and Figma expressed disappointment in the regulatory environment, acknowledging the challenges it presents. Despite the setback, Figma CEO Dylan Field emphasized his continued belief in the merits of the deal, while both companies expressed their commitment to finding ways to partner in the future.
