Adobe and Figma Terminate $20 Billion Deal After Clash With European, UK Regulators

tech.hindustantimes.com:

Adobe Inc. walked away from its $20 billion acquisition of startup Figma Inc. after clashing with regulators in Europe and the UK. Adobe will pay Figma a $1 billion termination fee, the companies said in a statement on Monday. They saw “no clear path” to getting regulatory approvals from the European Commission and the UK's Competition and Markets Authority.  

Adobe, the dominant force for years in such creative software as Photoshop and Illustrator, announced the purchase of Figma in September 2022. 

The acquisition, which would have been one of the largest takeovers ever of a private software maker, was a massive bet that more creative work will be done on the web, a market that Figma has rapidly seized. While Adobe has introduced less-expensive, streamlined products for that audience, most of its offerings are still desktop programs aimed at specialists.

But regulators in multiple jurisdictions said the deal was another example of a tech incumbent snuffing out a nascent competitor. UK regulators suggested drastic remedies to clear the deal, which Adobe rejected. US regulators, meanwhile, were preparing a lawsuit to block the acquisition earlier this year.

Both companies “strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” Adobe Chief Executive Officer Shantanu Narayen said in the statement.

Adobe shares gained 2.2% in New York on Monday morning.

“No Figma, No Problem,” was the title of a note by Evercore ISI analyst Kirk Materne. Adobe is in a much stronger position now than when the deal was announced due to its investments in generative artificial intelligence, Materne said, and walking away from the deal frees up cash for share