Adobes $20 Billion Figma Acquisition Called Off Amid Antitrust Concerns in Europe

In a significant development, Adobe's proposed acquisition of Figma, valued at $20 billion, has been called off due to regulatory pushback in Europe over antitrust concerns. The companies announced their intention to merge in September 2022, aiming to leverage Figma's web-based, multi-player capabilities to enhance Adobe's creative cloud technologies on the web.

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Mutual Agreement to Terminate the Transaction

Despite their belief in the merits and procompetitive benefits of the combination, Adobe and Figma mutually agreed to terminate the transaction. This decision was based on a joint assessment that there was no clear path to obtaining the necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.

Challenges Faced by US Companies in Europe

US companies have frequently encountered obstacles in Europe due to similar concerns about monopolies. Recent examples include biotech giant Illumina's decision to undo its $7.1 billion purchase of Grail after legal battles with antitrust enforcers in the US and Europe. Additionally, European regulators expressed concerns about Amazon's proposed acquisition of iRobot, citing potential harm to competition.

Regulatory Concerns in the UK

In October, Microsoft completed its acquisition of video game-maker Activision Blizzard for $69 billion after a challenging battle with antitrust regulators in Europe. Last month, the UK Competition and Markets Authority conducted an early review of the potential tie-up between Adobe and Figma. The review suggested a substantial lessening of competition in the global market for all-in-one product design software for professionals, as well as editing software.

About Figma and Adobe

Figma, founded in 2012, enables designers of interactive mobile and web applications to collaborate through multi-player workflows, sophisticated design systems, and a developer ecosystem. Adobe, headquartered in San Jose, California, offers software for creating, publishing, promoting content, and managing documents.

Future Collaboration and Termination Agreement

David Wadhwani, President of Digital Media Business at Adobe, expressed the company's commitment to exploring future partnerships with Figma. The companies have signed a termination agreement that resolves all outstanding matters from the transaction. Adobe Inc will pay Figma a termination fee of $1 billion, as previously agreed upon.

Market Reaction

Following the announcement, shares of Adobe rose 2% before the market open, reflecting investor sentiment on the news.