Adobe, a U.S. software company known for “Photo Shop,” eventually canceled its plan to merge with design software company Figma worth 20 trillion won.
Adobe released a press release on the 18th (local time) and announced that it had mutually agreed to terminate the merger agreement signed with Figma last year.
It has been 15 months since the company officially announced its acquisition of Figma in September last year. The decision was made based on the brakes of major countries, with the European Union and the U.K. competition authorities announcing preliminary results suggesting that the merger of the two companies would hinder competition. “Doby and Figma oppose the results of the investigation released by the competition authorities,” Adobe CEO Shantanu Narayen said. “I think it is in the best interest of each company to take an independent path.”
“This is not the result we expected,” said Pygma CEO Dylan Field, explaining, “We explained the differences between regulators around the world and our business, product, and service markets for thousands of hours, but we no longer saw a path to approval from the authorities.”
Earlier, Adobe received great attention from the market when it announced in September last year that it would acquire its rival Pygma for $20 billion (26 trillion won).
At the time of the announcement, Figma was a company that was founded only 10 years ago, the largest acquisition of a software company ever.
Field CEO, a co-founder of Figma, also received attention for making a ‘jackpot’ at the age of his early 30s.
Earlier in August, the European Commission said it would open an in-depth investigation, saying that the merger of Adobe and Figma could limit competition in the global web-based design service as a result of a preliminary investigation, which is the first phase of the investigation.
The U.K. Market Competition Authority (CMA) released a preliminary investigation late last month that Adobe’s acquisition of Figma could harm the U.K.’s digital design sector, signaling that the merger between the two companies is not smooth. In addition, the U.S. Department of Justice has been preparing an anti-trust lawsuit to block Adobe’s acquisition of Figma.
CMS in the UK ordered a bold alternative to Adobe to close the deal, but Adobe reportedly refused to do so.
Adobe canceled the acquisition of Figma and paid 1 billion dollars (1.3 trillion won) in penalty to Figma.
Wall Street predicted that the withdrawal of the acquisition of Figma would not have a significant impact on Adobe. Wall Street has been somewhat negative about the acquisition of Figma because of its high acquisition price.
Despite the news of the withdrawal of the acquisition of Figma, Adobe’s stock price rose by 2% on the New York Stock Exchange.
Kirk Matern, an analyst at investment bank Evercore ISI, sent a memo to investors on the same day, titled “There is no problem without Figma.”
“Dorby is in a much stronger position due to its investment in Generative AI than it was when it announced the acquisition of Figma,” he said. “The cancellation of the acquisition has allowed us to secure cash for stock repurchases.”
“The termination of the contract will not change Adobe’s dominant position in the creative software market,” said Anuragrana, an analyst at Bloomberg Intelligence.
Adobe is a global software company headquartered in the United States and leads the design creation software sector such as graphics, photos, and videos.
Figma is a software company founded in 2012 and supplies ‘Pigma Design’, a user interface (UI) software, to the market.
JULIE KIM
US ASIA JOURNAL
