Adobe's Figma buy isn't going to happen, and will cost Adobe $1 billion

AppleInsiderAppleInsider
Posted:
in General Discussion edited December 2023

Adobe has dropped its $20 billion acquisition of Figma after expressing concerns that there was "no clear path" to do so because of regulatory concerns.

Adobe
Adobe



On Monday, Adobe and Figma announced they would mutually terminate their merger agreement following increased pressure from E.U. and U.K. regulators.

"Although both companies continue to believe in the merits and procompetitive benefits of the combination, Adobe and Figma 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 the U.K. Competition and Markets Authority," Adobe said in a statement.

The statement notes that Adobe and Figma disagree with the regulatory findings but have decided to part ways regardless.

The Verge notes Adobe will be required to pay Figma a reverse termination fee of $1 billion, which has been previously agreed upon by both parties.

In September 2022, Adobe announced that it had begun the process of acquiring X.D. rival Figma for $20 billion. The deal would have involved both a mix of cash and stock consideration.

However, in February 2023, E.U. regulators blocked the acquisition over concerns that it would decrease competition within the design software market. It was learned at the same time that the U.S. DOJ had been investigating the deal in November 2022.

The Figma deal is not Adobe's only brush with regulators in recent days. The design software company could face hefty fines related to its overly difficult and costly subscription cancellation practices. In December 2023, Adobe told investors it has been cooperating with FTC staff on the matter since June 2022.

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Comments

  • Reply 1 of 6
    danoxdanox Posts: 2,875member
    Figma along with Affinity is giving Adobe some competition, (note: these two companies have out out of left field in recent times to challenge Adobe god knows Quark isn't).
    edited December 2023 watto_cobra
  • Reply 2 of 6
    AppleishAppleish Posts: 692member
    Elmo could have gotten away with a $1B loss, but he chose a $44B loss, because he's a jeeneeus biznizman.
    williamlondonwatto_cobra
  • Reply 3 of 6
    goodbyeranchgoodbyeranch Posts: 247member
    Remember when UX was the hot new job for about ten months. Those jobs dried up and the UX designers who have jobs, hate them. A quick search shows adobe job postings containing "UX" are all based out of India. This was the weirdest, shortest tech trend I've ever witnessed and Adobe got caught up in the hype. Good thing they can pull out for 1 billion instead of 20
    edited December 2023 ravnorodomwatto_cobra
  • Reply 4 of 6
    9secondkox29secondkox2 Posts: 2,729member
    Dang. 

    As a longtime Adobe customer, I’m no fan of their subscription pricing, but I feel for them with this. 

    You can’t buy Figma because the regulators put the hurdles up. Then they charge you ONE BILLION DOLLARS. BILLION. Over something that is not really their fault. 

    This isn’t like Microsoft throwing endless cash to finally get activision. 

    This is wrong on so many levels. Just because Adobe can afford it doesn’t mean they should have to. 
    watto_cobra
  • Reply 5 of 6
    9secondkox29secondkox2 Posts: 2,729member
    goodbyeranch said:
    Remember when UX was the hot new job for about ten months. Those jobs dried up and the UX designers who have jobs, hate them. A quick search shows adobe job postings containing "UX" are all based out of India. This was the weirdest, shortest tech trend I've ever witnessed and Adobe got caught up in the hype. Good thing they can pull out for 1 billion instead of 20
    Yeah. It sucks. And most of the UX people don’t know what the heck they’re doing. 

    Unfortunately, it’s expected of graphic designers, web designers, even coding engineers to be ux people as well in so many jobs. 

    UX is a huge deal in just about everything. I can’t tell you how many government sites I’ve run across that are nearly unusable, despite their UX folks getting paid for basically ruining everything - let alone some redesigns of private sector sites that look great but hurt to actually use. Thanks, fiver.com. LOL

    Being a digital craftsman is a tough market for those who’ve invested the time, energy, and money in actually getting good enough to be a true professional - only to watch the job your aiming for be awarded to someone else who has no clue, resulting in Frankenstein/app/etc. and the employer being none the wiser (with exception of companies who see their metrics tank due to users abandoning their wares). 

    Who knew? 
    goodbyeranchwatto_cobra
  • Reply 6 of 6
    MarvinMarvin Posts: 15,327moderator
    You can’t buy Figma because the regulators put the hurdles up. Then they charge you ONE BILLION DOLLARS. BILLION. Over something that is not really their fault. 

    This isn’t like Microsoft throwing endless cash to finally get activision. 

    This is wrong on so many levels. Just because Adobe can afford it doesn’t mean they should have to. 
    The same applied to Microsoft's deal, they would have had to pay Activision $3b if their merger had been successfully blocked and it was almost blocked:

    https://www.theverge.com/2023/4/26/23689252/microsoft-activision-blizzard-acquisition-blocked-uk-cma

    "If Microsoft’s CMA appeal fails or it fails to get approval from other regulators it will owe Activision $3 billion in break up fees."

    https://www.investopedia.com/terms/b/breakup-fee.asp

    "A breakup fee is used in takeover agreements as leverage on the seller against backing out of the deal to sell to the purchaser. A breakup fee, or termination fee, is required to compensate the prospective purchaser for the time and resources used to facilitate the deal. Breakup fees are normally 1% to 3% of a deal's value."

    It would be more sensible for a breakup fee to be relative to the effort involved in the merger than the value of the deal because the deals were $20b for Adobe and $69b for Microsoft, there's no way the compensation needed comes close to the billions. I'm sure the target of the acquisition isn't complaining about it though.
    Remember when UX was the hot new job for about ten months. Those jobs dried up and the UX designers who have jobs, hate them. A quick search shows adobe job postings containing "UX" are all based out of India. This was the weirdest, shortest tech trend I've ever witnessed and Adobe got caught up in the hype. Good thing they can pull out for 1 billion instead of 20
    I think this was due to a lot of companies deciding they needed a UX designer but most companies only need 1.

    Figma was reported to be making $400m recurring/subscription revenue in 2022 so it's a popular tool:

    https://www.cnbc.com/2022/09/15/adobe-to-acquire-design-platform-figma-for-20-billion.html

    "Adobe confirmed Figma’s ARR will surpass $400 million exiting 2022."

    That's equivalent to around 2 million active paid users.

    https://uxdesign.cc/figma-continues-to-skyrocket-63-reported-it-was-their-primary-ui-design-tool-in-2021-bb9390a8b96b
    https://zipdo.co/statistics/figma-user/

    Adobe can always have a partnership with Figma and replace their own Xd tool with it. It looks like they planned to do this:

    https://www.theverge.com/2023/6/22/23769586/adobe-xd-discontinued-shutting-down-figma-design-app

    Now they'd have to add a 3rd party subscription into their own bundle instead of including it.
    watto_cobra
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