Adobe and Figma have decided to scrap their proposed merger, which was set to be a significant move in the tech industry. This decision follows regulatory hurdles from the European Commission and the UK Competition and Markets Authority, foreseeing challenges in obtaining necessary approvals for the $20 billion deal.
The merger, initially revealed in September 2022, aimed for Adobe’s acquisition of Figma through a mix of cash and stock considerations. However, concerns raised by regulators in the UK and EU about potential market dominance and stifled competition in the design software space led to the termination of the agreement.
Both companies expressed disappointment but acknowledged that the termination was the most viable option, given the unlikely path to secure regulatory approval. As part of the fallout, Adobe is set to pay Figma a reverse termination fee of $1 billion in cash.
The fallout from this failed acquisition arrives at a challenging juncture for Adobe, which is already navigating tightened client spending, impacting its revenue projections. With the termination, Adobe faces a reevaluation of its strategic initiatives and financial forecasts.
Contrarily, Figma, though disappointed with the outcome, remains committed to serving its user base and exploring alternative partnerships. The company expressed pride in its team’s resilience during the uncertain period of the pending acquisition.
The decision to end the merger sparks discussions about the landscape of tech mergers and regulatory scrutiny, raising questions about the future direction of such strategic alliances in the industry.
For both Adobe and Figma, the termination marks a pivotal moment, prompting them to refocus their efforts independently while acknowledging the challenges that lie ahead in the ever-evolving tech landscape.