European Regulatory Obstacles Result in Abandonment of Adobe and Figma’s $20B Merger Deal

Adobe’s $20 billion mega-bid to buy rival Figma is now officially dead, after the companies said today that regulatory pushback in Europe had caused them to put an end to the acquisition plans. First announced in September last year, the deal was always going to attract regulatory scrutiny due to the size of the transaction and the fact that it took one of Adobe’s major rivals out of the picture. Irrespective of that outcome, the two companies were already facing significant headwinds in Europe. As a result of all this, Adobe will now have to pay Figma a termination fee of $1 billion, which was contractually payable in the event of the transaction failing to attain regulatory clearance — or if it failed to close within 18 months of the acquisition’s announcement last September. That 18-month stipulation hadn’t yet been reached, and no regulatory body had actually announced their final findings — but Adobe and Figma clearly saw no way through this, and with the DoJ also weighing up regulatory action, in the end it just made more sense to pull the plug on the deal entirely.

Adobe’s proposed acquisition of Figma, worth a massive $20 billion, has met its end as regulatory challenges in Europe prove to be insurmountable. The two companies announced today that they have jointly agreed to terminate the deal due to the lack of a clear path to obtain necessary approvals from the European Commission and the U.K. Competition and Markets Authority.

Although both companies continue to believe in the merits and procompetitive benefits of the combination, Adobe and Figma 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.

The deal, first revealed in September of last year, was bound to be closely examined by regulators due to its significant size and the impact it would have on Adobe’s competitors. The U.S. Department of Justice had been conducting a thorough investigation since early 2023, although they had not yet taken any legal action to block the acquisition. However, news surfaced over the weekend that Adobe and Figma were meeting with the DoJ in a last-ditch effort to avoid legal intervention.

But even with the U.S. DoJ’s involvement, both Adobe and Figma were facing an uphill battle in Europe. In late November, the U.K. concluded that the proposed acquisition would stifle innovation and launched an in-depth investigation. This followed a similar decision by the European Union in August.

The root of the concerns was that while the companies’ products were not exactly alike, Figma still held a dominant position in the market of interactive product design tools. This gave them significant influence over Adobe in the realm of digital asset creation, making them an “effective competitor.” If Adobe were to acquire Figma, it would eliminate this competition.

In a blog post today, Figma CEO and co-founder Dylan Field stated that the decision to terminate the deal was a joint one, as they were unable to convince regulators of the differences between their products and businesses.

“It’s not the outcome we had hoped for, but despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal,” Field said.

As a result of this, Adobe will now have to pay Figma a $1 billion termination fee, as per their contractual agreement in the event of the deal failing to receive regulatory clearance within 18 months of its announcement in September of last year.

While 18 months had not yet passed and no final decisions had been made by regulatory bodies, Adobe and Figma have made the decision to end the deal entirely due to the looming threat of regulatory action from the U.S. DoJ. It’s a disappointing end to what could have been a major acquisition in the tech world.

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Ava Patel

Ava Patel is a cultural critic and commentator with a focus on literature and the arts. She is known for her thought-provoking essays and reviews, and has a talent for bringing new and diverse voices to the forefront of the cultural conversation.

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