Adobe abandons Figma deal! Adobe’s $20 billion mega-bid to acquire rival Figma has officially been canceled. The companies announced today that they are ending their merger plans, stating that regulatory hurdles in Europe paved the way for this end. Here are all the details…
Adobe abandons Figma deal, and here is why
“While they continue to believe in the advantages of the merger and the benefits of increased competition, they have decided to terminate the acquisition based on a joint assessment that there is no clear path to obtain the necessary regulatory approvals,” the two companies said in a press release today.
The deal, first announced in September last year, was always going to attract regulatory scrutiny due to the size of the transaction and the fact that it removes one of Adobe’s key competitors from the market. The US Department of Justice (DOJ) closely scrutinized the deal for almost all of 2023 but never formally opened it. Before the weekend, however, news emerged that Adobe and Figma had met with the DOJ to avoid legal action.
Despite this outcome, the two companies were already facing significant challenges in Europe. The UK concluded that the proposed merger would “harm innovation” and therefore announced that the competition authority would launch an in-depth investigation following August when it announced similar action in the European Union (EU).
An effective competitor
The essence of the concerns was that the companies’ products were not exactly alike but that Figma was a “clear market leader” in interactive product design tools and exerted a “restraining influence” on Adobe in the area of digital asset creation tools. Therefore, Adobe’s acquisition of Figma would prevent it from being an “effective competitor.”
In a blog post published today, Figma CEO and co-founder Dylan Field said they made a “collective decision” after failing to convince regulators of the differences between their products and their business.
“We had hoped this would not be the outcome, but despite detailed discussions with regulators around the world about our business, our products, and the markets we serve, we no longer see a path to regulatory approval of the deal,” Field said.
Therefore, if Adobe fails to get regulatory approval for the deal now, or if the merger announced last September does not close within 18 months, it will have to pay Figma a $1 billion termination fee.
The 18-month deadline had not yet expired, and no regulatory agency had yet issued its final findings, but Adobe and Figma clearly saw no way out of the situation. With the DOJ also considering regulatory action, it eventually made more sense to cancel the deal altogether.
Featured image credit: Shubham Dhage / Unsplash