American multinational software company Adobe and cloud-based design software company Figma have “mutually” agreed to terminate the $20 billion merger deal. Adobe announced in September last year to acquire Figma and stock but faced a full-scale antitrust investigation by the European Union.
While the companies believe in the merits and procompetitive benefits of the combination, they could not find a clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority, Adobe said in a blog on Monday. The two companies have signed the termination agreement that resolves all outstanding matters from the transaction. Adobe will pay a termination fee of $1 billion to San Francisco-based Figma, Reuters reported.
“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” said Adobe chair and chief executive officer Shantanu Narayen.
Just to recap, Adobe bought the design software company in a deal valued at about $20 billion in September last year. The acquisition deal was a mix of half cash and half stock, marking it as the biggest ever takeover of a private software company. However, Adobe faced objections from regulators who feared that acquiring Figma, a rapidly advancing design platform, might stifle competition.
The concern was primarily that Adobe’s dominance in the design software market could be further solidified, potentially hampering innovation in the sector. Figma, known for its collaborative interface design tools, has gained popularity among designers, challenging Adobe’s position. On December 14, Adobe officially rejected the UK Competition and Markets Authority’s (CMA) proposed remedies, which included divesting significant assets to maintain competitive balance. This rejection was a pivotal moment in the merger’s trajectory.
The planned merger also faced scrutiny from the European Commission and was reportedly on the radar of the US Department of Justice for antitrust investigations. Following Adobe’s recent announcement to terminate the merger, the European Commission has halted its investigation.
“Going through this process with Shantanu, David and the Adobe team has only reinforced my belief in the merits of this deal, but it’s become increasingly clear over the past few months that regulators don’t see things the same way,” said Figma co-founder and chief executive officer Dylan Field. “While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe.”