Adobe and Figma terminate $20 billion merger deal

Adobe and Figma announced on Monday they have decided to cancel their planned $20 billion merger due to regulatory obstacles. The companies stated that they see no clear path to obtaining the necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority. Adobe will now pay Figma a $1 billion breakup fee, according to a regulatory filing.

The news comes less than a month after the UK regulator halted the $20 billion deal. Britain’s competition regulator said Adobe’s proposed $20 billion acquisition of the cloud-based designer platform Figma could potentially hinder innovation for software widely used by digital designers in the UK.

In a joint statement, they expressed their strong disagreement with the recent regulatory findings but acknowledged that it is in their best interests to proceed independently.

“There is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority,” the companies 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,” Shantanu Narayen, CEO of Adobe, wrote in a statement. “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 and mission to change the world through personalized digital experiences.”

The initial announcement of Adobe’s acquisition of Figma in September 2020 caused a drop in Adobe’s shares. However, the companies believed that the combination would bring about a new era of collaborative creativity.

The decision marks a shift from Narayen’s earlier statements, where he expressed confidence in the acquisition’s benefits for consumers. Despite their belief in the merits of the case, the companies cited the challenging regulatory environment as the reason for terminating the merger.

Antitrust regulators have been closely examining various tech deals, and this move follows a trend of regulatory scrutiny. The joint statement noted that regulators’ perspectives on the deal differed, leading to the decision to move forward independently.

Figma CEO Dylan Field expressed his continued belief in the merits of the deal but acknowledged the regulatory challenges. Adobe’s senior vice president, David Wadhwani, mentioned in a separate blog post that they would explore ways to partner with Figma to serve their joint customers despite the termination of the merger.

In Monday’s joint statement, Figma CEO Dylan Field wrote that “going through this process with Shantanu, David and 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.”

In a blog post, Adobe senior vice president David Wadhwani wrote, “We will continue to look for ways to partner with Figma to delight our joint customers.”

Founded in 2012 by Dylan Field and Evan Wallace, San Francisco-based Figma serves as a design platform for teams collaborating on product development. Figma, born in the browser, enables the entire product team to create, test, and expedite design processes. Its clientele includes notable companies like Zoom Video Communications, Airbnb, and Coinbase. Over the past decade, Figma has raised a total of $332.9 million across six funding rounds, with its latest funding coming from a Series E round on June 24, 2021.