Adobe Inc has officially abandoned its ambitious $20-billion acquisition of the startup Figma Inc. The decision comes in the wake of regulatory clashes with authorities in both Europe and the United Kingdom.
In a joint statement released on Monday, December 18, Adobe and Figma announced the termination of the deal, revealing that Adobe will pay Figma a substantial $1-billion termination fee.
The companies cited the lack of a "clear path" to secure regulatory approvals from both the European Commission and the UK's Competition and Markets Authority (CMA).
The proposed $20-billion cash-and-stock acquisition of Figma, a prominent cloud-based designer platform, was a strategic move by Adobe to strengthen its position in the market. However, regulatory hurdles proved insurmountable, leading to the decision to shelve the deal.
The UK's competition watchdog, in particular, stated on Monday (December 18) that Adobe had failed to propose adequate remedies to address regulatory concerns surrounding the acquisition. This refusal to address the issues raised further fuelled the regulatory standoff.
In response to the termination, Adobe CEO Shantanu Narayen expressed the companies' strong disagreement with the recent regulatory findings. Despite their disagreement, Narayen stated, "We believe it is in our respective best interests to move forward independently." This decision signifies a strategic pivot for both Adobe and Figma, who will now chart their paths separately.
The fallout from the failed acquisition comes at a challenging time for Adobe, as the company faces headwinds in the form of tightened client spending, affecting both annual and quarterly revenue.
Adobe, which initially struck the deal in September of the previous year, now finds itself reassessing its strategic initiatives and financial projections in light of the regulatory setbacks.
With inputs from Reuters
(Edited by : Shoma Bhattacharjee)
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