Adobe forced to abandon $20 billion Figma deal

Adobe Inc. has walked away from its $20 billion acquisition of startup Figma Inc. after clashing with regulators in Europe and the UK.

Adobe will pay Figma a $1 billion termination fee, the companies said in a statement on Monday. The companies saw “no clear path” to getting regulatory approvals from the European Commission and the UK’s CMA.

Regulators had been reviewing Adobe’s proposed purchase for more than year, demanding multiple rounds of documents and other information from the companies. Adobe had said in a statement published earlier on Monday that the CMA’s proposed remedies to allow the deal to go forward were “disproportionate” and the company refused to offer fixes.

Adobe, the dominant force for years in software such as Photoshop and Illustrator for design professionals, announced the purchase of Figma in September 2022. The acquisition, which would have been one of the largest takeovers ever of a private software maker, was a massive bet that more creative work will be done by small businesses and everyday users on the web, a market that Figma has rapidly seized. While Adobe has introduced less-expensive, streamlined products for that audience, most of its offerings are still programs aimed at specialists.

Figma is mainly used for designing app or website interfaces, and has trounced Adobe’s competing XD product in recent years. Adobe has argued the deal isn’t anticompetitive because the startup isn’t a rival of important products like Photoshop, which is used for photo editing, or Premiere, which is used for cutting video.

Still, the deal immediately drew comparisons to Meta Platforms Inc.’s 2012 acquisition of Instagram, another takeover of a small, but rising competitor and the powerful incumbent it threatened to upend.

Adobe tried to buy Figma in 2020 and 2021 as the startup rapidly gained steam, according to a filing with details on how the merger came together. Eventually in 2022, Figma accepted an offer double its valuation at a time when many peers were seeing decreases. Wall Street analysts saw the price tag as revealing severe competitive pressures on Adobe. Figma unsuccessfully solicited a bid from Microsoft Corp. before accepting Adobe’s offer. NDTV Profit