Adobe calls off $20-billion Figma deal

Adobe announced on Monday that it has abandoned its $20-billion cash-and-stock deal to acquire the cloud-based designer platform Figma. The decision was attributed to the absence of a clear path for approvals from antitrust regulators in the European Union (EU) and the United Kingdom (UK).

The deal, initially disclosed in September of the previous year, faced stringent scrutiny from regulators concerned about the potential impact of Big Tech acquisitions on market power and competition, particularly those involving start-ups viewed as emerging rivals.

Adobe’s shares, responsible for a termination fee of $1 billion to Figma, saw a 1.7% rise in pre-market trading on Monday. The competition watchdog in the UK stated that Adobe had not proposed remedies to address regulatory concerns surrounding the acquisition. The European Commission and the UK’s Competition and Markets Authority had not provided immediate responses to requests for comments.

Adobe contended that it did not directly compete with Figma and highlighted in November that its only relevant product to the antitrust question was the Adobe XD design tool. This tool reportedly operated at a loss of $25 million as a standalone app over the last three years and had only five full-time employees.

In response to the regulatory challenges, Adobe’s CEO, Shantanu Narayen, stated, “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.”

The deal, originally positioned as a strategic move for “the future of work,” raised investor concerns due to its substantial price tag, causing a more than $30-billion decline in Adobe’s market value when it was first announced. Figma’s venture capital backers, including Index Ventures, Greylock Partners, and Kleiner Perkins, were notable beneficiaries of the deal.

In a separate development, earlier this month, Adobe provided a financial forecast with annual and quarterly revenue estimates below Wall Street expectations, citing continued tightened client spending as a contributing factor.