Adobe and Figma scrap £16bn merger after regulators criticise deal
Adobe and Figma have ditched their $20bn (£16bn) tie-up after struggling to secure regulatory approval in both the UK and Europe.
In a statement released on Monday, Adobe said both companies still believe in the merits of the deal but they have “mutually agreed to terminate the transaction” as there is “no clear path” to getting approval from the UK’s Competition and Markets Authority (CMA) and the European Commission (EC).
The Photoshop creator is now required to pay Figma a reverse termination fee of $1bn (£0.8bn) in cash.
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Adobe’s chair and chief executive, Shantanu Narayen.
“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,” Narayen added.
In a statement today, a CMA spokesperson said the regulator is dropping its investigation.
Last month, it provisionally found that the proposed acquisition of Figma, initially announced 15 months ago, could harm competition in the country’s digital design sector, leading to fewer choices for designers of digital apps, websites and other products.
But Adobe and Figma believe the watchdog’s assessment is too broad and an exec at the former tech company recently accused it of failing to properly judge the size of the market.
Figma chief executive Dylan Field said: “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.
“While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe.”
In November, the EC also said its preliminary view was that Adobe’s takeover of Figma “may significantly reduce competition” in global design software markets.
It published a statement today announcing the end of its investigation.
The EC’s executive vice-president Margrethe Vestager, in charge of competition policy, said the two companies compete in the market for interactive product design.
She said: “By combining these two companies, the proposed acquisition would have terminated all current and prevented all future competition between them. Our in-depth investigation showed that this would lead to higher prices, reduced quality or less choice for customers.
“It is important in digital markets, as well as in more traditional industries, to not only look at current overlaps but to also protect future competition. This applies in particular to transactions by which large, established companies acquire successful disruptive innovators,” Vestager added.
Competition partner at UK law firm Fladgate, Alex Haffner, said some may see today’s announcement as stemming from an anti Big Tech stance from the CMA, following on from the Microsoft and Activision.
This was only green-lighted after Microsoft surrendered their cloud rights to existing Activision games, such as Call of Duty, or any new games released during the next 15 years.
But Adobe refused to pay the significant concessions in the form of structural divestment that both the CMA and the EC were demanding of it.
“Certainly the regulatory landscape for Big Tech has become somewhat more complicated in recent times, but, on this occasion at least, the regulators appear to be talking with a unified voice in their opposition to the proposed deal,” Haffner said.