In a surprising turn of events, Adobe has officially abandoned its ambitious $20 billion acquisition of Figma. The decision comes after both the UK’s Competition and Markets Authority (CMA) and the European Commission raised concerns about the potential impact on competition. Due to the deal’s termination, Adobe will pay Figma a reverse termination fee of $1 billion in cash.
The regulatory bodies, including the CMA and the European Commission, expressed concerns about the merger. They thought that the merger would eliminate healthy competition in the design software market. Figma’s product design software grew rapidly and surpassed Adobe’s XD in popularity. Designers and regulators were worried that Figma’s potential independent growth could be hampered under Adobe’s control.
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Despite the concerns raised, Adobe initially declared its commitment to engage with the CMA and explore potential remedies. CMA also proposed a few remedies to restore conditions of competition but faced resistance from Adobe. However, recent developments indicate that no realistic remedy could address the regulatory concerns.
Adobe’s Chair and CEO, Shantanu Narayen, expressed the companies’ disagreement with recent regulatory findings but highlighted their mutual decision to pursue independent paths. “While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity,” Narayen stated.
As a result, Adobe and Figma have mutually agreed to terminate the merger. Following the termination agreement, Adobe will pay Figma a previously established $1 billion termination fee, marking a significant financial consequence for the tech giant.
Adobe announced the acquisition of Figma last year in September. While Adobe and Figma had shared a vision to redefine the future of creativity and productivity through their collaboration, regulatory roadblocks have led them to part ways. Adobe remains optimistic about its market position and mission to bring personalized digital experiences to users worldwide.
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