Adobe and Figma have called off their planned merger. The reason for stopping the purchase is the inability to obtain permission from the antitrust agencies in the United Kingdom and Europe. If realized, the $20 billion would have been at the top of the funding spent on startup acquisitions.
“Although both companies continue to believe in the merits and procompetitive benefits of the combination, Adobe and Figma mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.” the companies wrote in recent press release.
After 15 months spent trying to find legal solutions for the merger, the two companies regretfully concluded that they do not see a way to complete what was initially agreed upon. As a result, the two companies issued a separate announcement that Adobe and Figma have mutually agreed to terminate the purchase agreement.
Under the terms of the 2020 purchase agreement, due to the cancellation of the purchase, Adobe will pay Figma $1 billion. The companies do not agree with the decision of the regulators, but believe that there is nothing more to do.
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Shantanu Narayen, chair and CEO, Adobe. “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.” wrote Adobe CEO Shantanu Narayen.
Adobe and Figma announced the merger in September 2022
News of the Figma acquisition broke in September 2022. Under the deal, Adobe was to pay $20 billion, half in stock and half in cash. The original purchase agreement was to leverage the areas in which Figma excels to complement and expand Adobe’s portfolio and services.
Interestingly, Adobe shares rose 0.6 percent after the news of the purchase halt.
The announcement of the end of efforts to successfully complete the acquisition came as a surprise. Last week, an Adobe executive was convinced that the acquisition of Figma would bring a series of benefits to customers, reports CNBC.
The merger of Adobe and Figma in 2023 was also considered by the US Department of Justice.
The UK Competition and Markets Authority’s view is that the deal would distort competition. Therefore, a detailed investigation is required. The attitude of the European Commission is similar.
The news of the contract cancellation is welcome for Figma users. Some feared that buying the startup would not bring any good. Figma is certainly one of Adobe’s biggest competitors and a maker of some of the best design tools out there.
Adobe and Figma’s decision comes before the end of the 18-month period in which the acquisition must be completed.