Now that the companies have formally acknowledged that regulatory rejection in Europe forced them to suspend acquisition preparations, Adobe’s $20 billion mega-bid to purchase rival Figma is effectively dead. “Figma and Adobe mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority,” according to a press release issued today, “although both companies continue to believe in the merits and procompetitive benefits of the combination.”
Due to the merger’s size and the fact that it eliminated one of Adobe’s primary rivals, regulatory scrutiny was inevitable when it was first announced in September of last year. For the majority of 2023, the U.S. Department of Justice (DOJ) had been closely monitoring the deal, but it hadn’t filed a formal lawsuit to stop it from closing. But before to the weekend, rumors circulated that Adobe and Figma had met with the DOJ to try to settle their legal dispute.
Regardless of the outcome, the two companies were already facing significant obstacles in Europe. The United Kingdom declared in late November that the proposed acquisition would “harm innovation,” and consequently its competition regulator will launch a comprehensive inquiry. This decision was made in reaction to an announcement of a similar course of action made earlier in August by the European Union (EU). a formidable opponent The primary defense of the claims was that Figma was the “clear market leader” for interactive product design tools and had a “constraining influence” over Adobe in the market for tools for creating digital assets, despite the fact that the two companies’ products were not precisely the same.
Thus, Figma’s acquisition by Adobe would prevent Figma from functioning as an “effective competitor.” In a blog post today, Figma’s CEO and co-founder Dylan Field said that the company reached a “joint decision” because they were unable to convince regulators of the differences between their numerous businesses and products. Field said, “We no longer see a way to get the merger approved by regulators.
Though thousands of hours were spent with authorities worldwide outlining the distinctions between our businesses, goods, and the markets we service, the result is not what we had hoped for.” Due to all of this, Adobe now owes Figma a $1 billion termination fee. This was meant to be paid following the terms of the contract if regulatory clearance was not obtained or the acquisition did not close within 18 months after it was announced in September of last year. In the end, it was more prudent to call off the agreement entirely because Adobe and Figma were unable to resolve the situation, even though the 18-month deadline had not yet passed and no regulatory authority had made public their conclusions.
