Adobe scraps $20 billion acquisition of Figma

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Adobe will abandon its $20 billion acquisition of design software maker Figma, the two companies said Monday, bowing to growing regulatory opposition to the deal on both sides of the Atlantic.

Under the terms of the now scrapped plan, Adobe will have to pay Figma a $1 billion breakup fee.

The announcement is the latest sign that government efforts to more aggressively scrutinize mergers are having some success.

Announced last fall, the transaction was intended to give Adobe, the maker of widely used software such as Photoshop and Illustrator, control of a fast-growing provider of collaborative design software. The price of the deal was double what private company Figma had raised in its most recent fundraising round, underscoring how much Adobe wanted to gain a foothold in the sector.

But the planned combination raised concerns among antitrust regulators in the United States, the European Union and Britain about whether it would reduce potential competition.

While the companies have argued that they largely do not compete (except for an Adobe product that has not gained much traction), regulators said the acquisition could prevent future rivalries and lead to higher prices for consumers. (To some, it seemed similar to deals like Facebook's $1 billion acquisition of Instagram, which critics said hampered the rise of a social media competitor.)

“It is important in digital markets, as well as in more traditional industries, not only to observe current overlaps but also to protect future competition,” Margrethe Vestager, head of competition policy at the European Commission, said in a statement on Monday.

Early Monday morning, ahead of its decision to scrap the deal, Adobe called the concessions proposed by Britain's Competition and Markets Authority “disproportionate.” The European Commission was set to weigh possible remedies soon, and Adobe had been awaiting a decision from the Justice Department on whether it would sue to block the deal.

Monday's announcement was an admission that the companies were unlikely to overcome those objections and would have had to spend months fighting regulators in court in three jurisdictions.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.” Shantanu NarayenAdobe's president and CEO said in a statement.

dylan fieldFigma CEO said in a blog post: “We no longer see a path to regulatory approval of the deal.”

Adobe shares rose slightly in morning trading.

The decision is another victory for stricter enforcement of antitrust laws: It comes a day after Illumina, a large genetic sequencing company, said it sell grail cancer test manufacturer which he bought for $7 billion after an appeals court upheld the Federal Trade Commission's argument that the merger would “substantially reduce competition.”

(Like Adobe, Illumina argued that it was not directly competing with its acquisition target, a claim that regulators had rejected.)

Antitrust regulators also suffered some painful defeats this year. Most notable was Microsoft's acquisition of video game giant Activision Blizzard for $69 billion; that agreement closed in October after receiving objections from the FTC and Britain's Competition and Markets Authority.



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