Adobe‘s $20 billion mega-bid to buy rival Figma has been officially put on hold after the companies said today that regulatory pushback in Europe had made them cancel the plans.
Adobe and Figma still believe in the merger’s procompetitive benefits, according to a press release. Both parties discontinued the arrangement because they believed the European Commission and U.K. Competition and Markets Authority clearances were unclear.
Last September, the deal was announced. Because it was so enormous and eliminated Adobe’s most prominent opponent, regulators would always watch it. The DOJ had monitored the agreement for most of 2023 but had not yet sued to block it. Before the weekend, Adobe and Figma were meeting with the DOJ to avoid legal action.
In Europe, the two corporations were already struggling regardless of the decision. After the EU declared a similar course of action in August, the U.K. concluded in late November that the proposed acquisition would “harm innovation” and initiate an in-depth probe.
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Effective rival
Despite their differences, Figma was the “clear market leader” for interactive product design tools and a “constraining influence” over Adobe in the digital asset creation tools space, so Adobe buying Figma would prevent Figma from being an “effective competitor.”
In a blog post, Figma CEO and co-founder Dylan Field claimed they made the “joint decision” after trying to convince regulators of their product and business differences.
After spending thousands of hours with regulators worldwide describing how our businesses, products, and markets differ, Field said, “We no longer see a path towards regulatory approval of the deal.”
After everything, Adobe must pay Figma $1 billion to terminate. This was due if the merger didn’t gain regulatory permission or close within 18 months of last September’s purchase announcement.
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No regulatory organisation had released their final results within the 18-month deadline. Adobe and Figma couldn’t see a way out, and with the DOJ mulling regulatory action, it made more sense to cancel the agreement.
Toby Smith, a former CMA legal director and Geradin Partners partner in London, told reporters, “It is not uncommon to back out of a deal right before the final decision when a ban seems inevitable.”
The merging parties won’t make a wrong choice that sets a bad example. It saves on legal fees, although that may not matter on such a momentous day.