A mega-money $20 billion deal orchestrated on the West Coast of the United States has been terminated after the UK and European Union expressed concerns over its effect on competition.
The merger of Adobe and Figma, under which Adobe would have acquired Figma for a mix of cash and stock consideration, came under the microscope after the UK’s Competition and Markets Authority provisionally found that it could harm the digital design sector. The European Commission expressed similar concerns.
Figma is currently the world’s leading provider of product design software which is used by designers, creative agencies and businesses to help deliver leading websites and apps that are used by millions of people.
Adobe is one of Figma’s main competitors in product design software, and currently competes using its Adobe XD product. Adobe is also the largest supplier of image editing and illustration software, well known for its Photoshop and Illustrator applications.
More UK businesses than ever rely on design software to help present their products and services via websites and apps, with the CMA’s investigation finding that around 80% of the professional product design market use Figma’s software.
Adobe and Figma said they had mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and CMA. Adobe will pay Figma a termination fee.
Alex Haffner, competition partner at UK law firm Fladgate, said people seeing the announcement “may view it as an anti-Big Tech stance from the CMA”, especially in the wake of the regulator forcing concessions from Microsoft in its $69bn takeover of Activision Blizzard.
“However it is clear that it was both the CMA and the European Commission who were expecting significant concessions in the form of a structural divestment in order to clear the deal – and that was not a price Adobe could pay,” he added.
“Moreover, unlike in the Microsoft case, Figma appears to be quite willing to retain its independence and take any break-up fee it negotiated from Adobe.
“Certainly the regulatory landscape for Big Tech has become somewhat more complicated in recent times, but, on this occasion at least, the regulators appear to be talking with a unified voice in their opposition to the proposed deal.”
Shantanu Narayen, chair and CEO, Adobe, said: “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.”
Dylan Field, co-founder and CEO, Figma, added: “Going through this process with the Adobe team has only reinforced my belief in the merits of this deal, but it’s become increasingly clear over the past few months that regulators don’t see things the same way.
“While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe.”