Adobe And Figma Terminate $20 Billion Merger Amid Regulatory Hurdles

In a surprising twist, Adobe and Figma have officially called off their highly anticipated $20 billion merger, citing insurmountable regulatory obstacles. The joint announcement on Monday revealed the companies’ inability to secure essential regulatory approvals from the European Commission and the UK Competition and Markets Authority, leading to a sudden halt in the merger proceedings.

Despite the announcement, Adobe’s stock saw a marginal increase of 0.6% in Monday morning trading. Adobe’s CEO, Shantanu Narayen, expressed disagreement with recent regulatory findings but highlighted the decision to pursue independent paths as the best course of action for both companies. Although the initial ambition was to redefine creativity and productivity jointly, Adobe and Figma believe they can still leverage individual opportunities effectively.

The proposed acquisition, initially disclosed in September 2020 as a cash-and-stock deal valued at approximately $20 billion, will now be accompanied by a $1 billion breakup fee that Adobe will pay to Figma, as detailed in a regulatory filing.

This abrupt change in plans contradicts Narayen’s recent statements, affirming confidence in the merger’s benefits for consumers. He acknowledged the formidable challenges posed by the regulatory environment surrounding tech deals and the intensifying scrutiny of antitrust concerns.

The decision to abandon the merger follows a broader trend of heightened scrutiny by antitrust regulators examining various tech deals. In a notable case, Meta sold Giphy to Shutterstock in May after the UK’s competition watchdog raised concerns about potential anticompetitive effects. Additionally, the Competition and Markets Authority (CMA) is currently reviewing Microsoft’s investment in OpenAI.

In a joint statement, Figma’s CEO, Dylan Field, acknowledged a reinforced belief in the deal’s merits throughout the process but acknowledged an increasing misalignment with regulators’ perspectives in recent months. Despite the termination of the merger, Adobe expressed a commitment to exploring collaboration opportunities with Figma to enhance overall customer experiences, as affirmed by David Wadhwani, a senior vice president at Adobe, in a separate blog post.

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