Adobe and Figma jointly declared the cancellation of their planned merger. The decision to call off the deal comes after increasing scrutiny from UK and EU regulators.
The proposed acquisition, where Adobe intended to buy the Figma product design platform for $20 billion, has been terminated. Consequently, Adobe is obligated to pay Figma a reverse termination fee of $1 billion in cash.
Adobe’s chair and CEO, Shantanu Narayen, expressed disagreement with the recent regulatory findings, stating that while Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, they continue to be well positioned to capitalize on the massive market opportunity and mission to change the world through personalized digital experiences.
Shantanu added that however, in light of the circumstances, both parties believe that it is in their respective best interests to move forward independently.
Regulators raised concerns about Adobe’s near-monopoly in the design software market when opposing the deal. The acquisition of Figma, a rapidly expanding product design platform surpassing Adobe’s XD application in popularity, sparked worries among regulators. They feared that Adobe’s control could stifle innovation that might have thrived if Figma remained independent. Despite concerns voiced by designers and ongoing probes since the merger announcement in September 2022, Adobe consistently countered these claims.
In a letter dated December 14th, Adobe declined the suggested remedies by the UK’s Competition and Markets Authority (CMA) for approving the merger after an extensive antitrust probe.
The CMA proposed that Adobe make a substantial divestment of assets, source code, and engineers to “restore the conditions of competition.”
All involved parties were slated to discuss the CMA’s provisional decision to block the deal on December 21st, with a final deadline for approval or rejection of the acquisition set for February 25th. The European Commission was also examining the deal, and DOJ was reportedly gearing up for similar investigations.
Under intense pressure, Adobe faced limited flexibility in advancing the deal while ensuring acquisition of the desired Figma assets. This included going through potential sacrifices of its own apps in the context of antitrust appeasement.
Source: Economic Times