Adobe acquires Macromedia
Adobe Systems has announced a definitive agreement to acquire Macromedia in an all-stock transaction valued at approximately $3.4 billion.
Under the terms of the agreement, which has been approved by both boards of directors, Macromedia stockholders will receive, at a fixed exchange ratio, 0.69 shares of Adobe common stock for every share of Macromedia common stock in a tax-free exchange. Based on Adobe?s and Macromedia?s closing prices on Friday, April 15, 2005, this represents a price of $41.86 per share of Macromedia common stock. That is a 25 percent premium to Macromedia's closing price of $33.45 on Friday. Upon the close of the transaction, Macromedia stockholders will own approximately 18 percent of the combined company on a pro forma basis.
"By combining the passion and creativity of two leading-edge companies, we will continue driving innovations that are changing the ways people everywhere are experiencing and interacting with information, Adobe said it in a prepared statement.
In the combined company, Chizen will continue as chief executive officer and Shantanu Narayen will remain president and chief operating officer. Stephen Elop, president and chief executive officer of Macromedia, will join Adobe as president of worldwide field operations. Murray Demo will remain executive vice president and chief financial officer. Dr. John Warnock and Dr. Charles Geschke will remain as co-chairmen of the Board of Directors of the combined company and Rob Burgess, chairman of the Macromedia Board of Directors, will join the Adobe Board.
"Both Macromedia and Adobe are passionate about creating and enabling great experiences across a wide range of devices and operating systems," said Stephen Elop, president and chief executive officer of Macromedia. "Our combined teams will be a powerful force for innovation around cutting-edge platforms for delivering content and applications."
According to CBS Marketwatch, Adobe said second-quarter earnings and revenue would be toward the high end of previous guidance due to strong demand for Acrobat. The company had been expected earnings per share between 51 cents and 55 cents and revenue of between $475 million to $495 million.
Separately, Macromedia said it expected net revenue for its fourth fiscal quarter to exceed the $108 to $113 million guidance it provided in January.
Along with the acquisition, Adobe also announced a $1 billion stock repurchase program to start after the Macromedia deal has been completed.
"After a review of the combined companies' financial position, our Board concluded that the repurchase program is consistent with our overall commitment to deliver value to our stockholders," Chizen added.
Under the terms of the agreement, which has been approved by both boards of directors, Macromedia stockholders will receive, at a fixed exchange ratio, 0.69 shares of Adobe common stock for every share of Macromedia common stock in a tax-free exchange. Based on Adobe?s and Macromedia?s closing prices on Friday, April 15, 2005, this represents a price of $41.86 per share of Macromedia common stock. That is a 25 percent premium to Macromedia's closing price of $33.45 on Friday. Upon the close of the transaction, Macromedia stockholders will own approximately 18 percent of the combined company on a pro forma basis.
"By combining the passion and creativity of two leading-edge companies, we will continue driving innovations that are changing the ways people everywhere are experiencing and interacting with information, Adobe said it in a prepared statement.
In the combined company, Chizen will continue as chief executive officer and Shantanu Narayen will remain president and chief operating officer. Stephen Elop, president and chief executive officer of Macromedia, will join Adobe as president of worldwide field operations. Murray Demo will remain executive vice president and chief financial officer. Dr. John Warnock and Dr. Charles Geschke will remain as co-chairmen of the Board of Directors of the combined company and Rob Burgess, chairman of the Macromedia Board of Directors, will join the Adobe Board.
"Both Macromedia and Adobe are passionate about creating and enabling great experiences across a wide range of devices and operating systems," said Stephen Elop, president and chief executive officer of Macromedia. "Our combined teams will be a powerful force for innovation around cutting-edge platforms for delivering content and applications."
According to CBS Marketwatch, Adobe said second-quarter earnings and revenue would be toward the high end of previous guidance due to strong demand for Acrobat. The company had been expected earnings per share between 51 cents and 55 cents and revenue of between $475 million to $495 million.
Separately, Macromedia said it expected net revenue for its fourth fiscal quarter to exceed the $108 to $113 million guidance it provided in January.
Along with the acquisition, Adobe also announced a $1 billion stock repurchase program to start after the Macromedia deal has been completed.
"After a review of the combined companies' financial position, our Board concluded that the repurchase program is consistent with our overall commitment to deliver value to our stockholders," Chizen added.
Comments
"Oh God."
Adobe generates about 92% of its revenue from the authoring software market and is fourth in the Web site design market with just under 5%, IDC said."
So basically, Adobes buying Flash and their development tools, and throwing everything else away.
Although Fireworks is not as powerful as Photoshop, it is still a nice little program for super quick images. I only see Adobe keeping Flash intact and the rest of Macromedia's programs being discontinued or incorporated into Adobe lines.
I have worried how far away this day would be. I had a bet with a fellow designer that at some point with Adobe's market share they would some day absorb Macromedia being that they had competing products. And on that point what other company will force Adobe to keep pushing development as hard as it has been.
Time will tell....
Could Apple turn out to be Adobe's arch nemisis in 4-5 years? Its already been inching on its turf over the last half decade.
Look what Apple has done with video and audio!
I can just see new trenches being dug as we speak... Apple on one side and Adobe on the other. Peering over the lines to see what the other is doing, drawing new maps, and re-arming.
Jobs will be dealing a "truce" for 3-5 years to guarantee that Adobe delivers Photoslop and other key apps to MacOS X for that time, and therefore give him and Apple time to come up with some crazy ass Apple-only 2-D and Web authoring apps.
Adobe MUST have a competitor. The only one I can see is Apple.
get ready for some really really really turbulent times in the graphics arena.
Maybe you'll see some key GIMP developers dissappearing and "sighted" at 1 Infinite Loop over the next few years. I wonder if Apple would dare buy Quark and really get the shit flying.
I'm with you guys with no real competition I look for graphics web and print to absolutely suck in the future and no amount of leveraging of Core Image and Video is going to propel a smaller company from even trying to enter this realm.
Well today just may be the day a diverse graphics market died replaced by a 1600lb Gorilla. I just don't know what to take from this.
Otherwise, this sucks!
look around at the other mountaintops and start annexing.
i dunno. i would hope that adobe would improve some of macromedia's shortcomings, but after that, what next?
The lack of competition is bad, but really they are now one company with no competition as opposed to two companies with no competition. Fireworks/ImageReady was the only real overlap between these two.
Originally posted by ZO
I wonder if Apple would dare buy Quark and really get the shit flying.
i doubt it, simply because of the mess that quark's code is these days. trying to update quarkxpress was like trying to re-wire the mess of cords behind your home entertainment center.
people, i don't think we need to worry about what will die in the graphics market. bits and pieces of the macromedia apps will live on for a long time. but now microsoft owns the office, and adobe OWNS the studio. there's only one place left for apple to own...
the home.
Originally posted by MrSparkle
I think Adobe will sell off Golive. They sold Freehand to Macromedia back when no one had really heard of them. As for Fireworks, it has too much of a following for them to kill it. I imagine they'll just add it's functionality to ImageReady.
personally, i would like imageready to be thrown out of the nearest airlock, and i get the feeling it will be. anyone else notice NOTHING was updated for imageready? well, now you know why... someone told the photoshop/imageready team "don't bother... in a few weeks, we won't need a fireworks competitor."
i also don't think they'll sell golive. think about it... they've been bundling golive with the cs professional suite for a while now, so it has a HUGE embedded market... even if very few folks use it.
Originally posted by aplnub
If Adobe would dump GoLive and polish off DreamWeaver I wouldn't mind.
Or merge the best of both and call it GoFlash
This does kill competition, but I ask everyone here, would you have preferred the buyer been Microsoft?
I think Adobe is the lesser or two evils.
Originally posted by rok
personally, i would like imageready to be thrown out of the nearest airlock, and i get the feeling it will be. anyone else notice NOTHING was updated for imageready? well, now you know why... someone told the photoshop/imageready team "don't bother... in a few weeks, we won't need a fireworks competitor."
Maybe so. Could just be a naming issue.
i also don't think they'll sell golive. think about it... they've been bundling golive with the cs professional suite for a while now, so it has a HUGE embedded market... even if very few folks use it.
With Freehand, they were forced to. They may be in this case, as well. They can always make up for it with direct upgrades from GoLive to Dreamweaver.
I guess they held onto PageMaker for a long time, even with InDesign. But this might be an easier transition.
I can't say I get the warm fuzzies from this.
The one upside that immediately comes to mind, though, is that Macromedia products have by and large sucked on OS X for some time now. Anyone who's suffered through using Dreamweaver or Flash on the Mac for the past few years knows what I'm talking about.
Hopefully Adobe will raise the bar...
Originally posted by Celco
Adobe Are moving away from the mac. Apple should have bid for Macromedia.
Adobe isn't moving away from the Mac nearly as fast as Macromedia was, though. So that flavor of gloom-and-doom doesn't make much sense to me. What is unsettling is seeing a new monopoly in creative software form right before our eyes.
And it does look like Adobe and Apple are increasingly becoming competitors. To say the least.
As it stands, BBEdit offers decent web design even though it lacks all the fancy bells and whistles of Dreamweaver et. al.
I agree this merger will force Apple's hand. Do they take WebObjects and tone it down for the non-enterprise user? Do they produce a photo-editing suite by year's end? Do they accelerate new features to iWork, particularly Pages? PDF is such an important part of OS X that I doubt Apple will do too much to further widen the rift between them and Adobe.