Adobe and Figma terminate their $20B merger, announced in September 2022, after seeing “no clear path” to UK and EU regulatory approval; Adobe will pay $1B

Adobe (ADBE.O) on Monday shelved its $20 billion cash-and-stock deal for cloud-based designer platform Figma, pointing to …

Reuters 2023-12-18

Context & Ripple Effects

Adobe’s proposed purchase of Figma had been under pressure well before its termination: the transaction had stalled amid regulatory challenges, while Adobe was redirecting attention toward AI.

The reported end point suggests that potential concessions—including keeping Figma separate from Creative Cloud and divesting Adobe XD—were insufficient to create an approvable route with UK and EU authorities.

First-order effects

Adobe and Figma remain separate companies, and Adobe incurs the stated $1 billion termination payment.
Adobe loses the planned route to bring Figma’s collaborative design product into its software portfolio; Figma retains its existing leadership and standalone position.

Second-order effects

Adobe must pursue its design-product strategy without the acquisition, while Figma can continue competing independently for users and partners that had been awaiting the deal’s outcome.
The collapse makes proposed behavioral and divestiture remedies a less reliable planning assumption for companies considering similarly contested software acquisitions in the UK and EU.

Third-order effects

If comparable deals continue to face no viable approval path, large software vendors may place more weight on internal product development and smaller, less contestable transactions rather than category-defining acquisitions.
UK and EU merger review could increasingly shape global software deal design early in negotiations, because remedies negotiated late in the process may not preserve a transaction’s strategic rationale.

The trend: The terminated deal is a data point in tighter antitrust constraints on consolidation among adjacent software platforms with overlapping product ambitions.

Discussion

@gergelyorosz Gergely Orosz on x
On the short-term, this is a big loss for employees whose stock would have been liquid. On the longer run: Figma could easily bigger than Adobe in, say, 10 years. Adobe knew this. It's why they were willing to pay so much ($20B) for the company dominating collaborative design.
@lewis_crofts Lewis Crofts on x
All you tech companies considering a merger, take note of this statement by ⁦@vestager⁩ on Adobe/Figma abandonment: [image]
@samuelstolton Samuel Stolton on x
Adobe's record $20 billion deal for Figma is no more, after heavy regulatory scrutiny from the UK, EU and US meant that the firms couldn't cook up a package to appease anticompetitive concerns. Adobe to pay $1 billion break up fee. More @TheTerminal @business
@samuelstolton Samuel Stolton on x
.@vestager on Adobe-Figma termination: “By combining these two companies, the proposed acquisition would have terminated all current and prevented all future competition between them.” https://ec.europa.eu/...
@anammostarac Ana Mostarac on x
“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.” Europe, the hall monitors of the world.
@om @om on x
We have legislative and regulatory bodies that still think we are living in an industrial economy, where we are living in a networked economy. I feel for the Figma team and the same for Adobe. Nonetheless, the customers will help chart the course forward for @zoink
@nathanbarry Nathan Barry on x
The Figma / Adobe deal is officially off. Blocked by UK regulators. A few thoughts: 1. I don't think this should have been blocked. The regulators case about competition is pretty weak. 2. This is ultimately good for Figma. Their innovation and engineering is legendary and I...
@diegojimenez Diego Jimenez on x
Both parties blame regulation, but I wonder if the recent wave of generative AI made the acquisition less necessary for Adobe? Bittersweet for my Figma friends but excited to see what they'll do without the constraints of a big corporation. Long @figma and long @zoink 🙌
@edsim Ed Sim on x
End of an era with regulators squashing huge M&A Will be cool to see Figma execute while not under the cloud of am I Adobe or not. Super hard to hire folks into atmosphere like that, decisions can be for ST vs LT Sky's the limit!
@auchenberg Kenneth Auchenberg on x
Figma just raised a $1B round by terminating the merger.
@samwillis Sam Willis on x
@steveruizok “In accordance with the terms of the Termination Agreement, the Company will make a cash payment to Figma in the previously agreed amount of one billion dollars within three business days” 😲 https://www.sec.gov/...
@sparklinguy @sparklinguy on x
All design communities (Read WhatsApp groups + Discord Channels) today: OMG 😱 You know why, right?
@aexm Ana Milicevic on x
Can't help thinking if Adobe x Omniture - the deal that defined a decade+ of Adobe's transformation - would have cleared regulatory approval today. Adobe x Figma would have likely been of similar caliber.
@jeremykauffman Jeremy Kauffman on x
Imagine working hard for years to create something worth big $$, only for some fucking losers who have never made anything in their lives to violently stop you from selling it. Stop thinking of regulators as well-intentioned. Think of them as evil as rapists or robbers.
@daniel__designs Daniel Destefanis on x
Acquisition is no longer happening y'all. Let's still build some great community stuff together next year.
@bhalligan Brian Halligan on x
The Adobe acquisition of Figma will not go through after 15 months of regulatory review. I suspect this will give even further pause for large tech firms on the M&A front.
@growing_daniel Daniel on x
They're killing our exits. @dingboard_ the biggest victim here.
@nikitabier Nikita Bier on x
You will change the world. You will build a massive company. You will NOT get the liquidity event. This is the new economy.
@packym Packy McCormick on x
Bad news: regulators locking the tech M&A window. Good news: another great one to add to the tech IPO list when that door opens.
@parkerortolani Parker Ortolani on x
I think Figma is better off as an independent company, but I don't think there should've been any sort of serious regulatory pressure to prevent the merger from happening
@pradyuprasad Pradyumna on x
does anyone have a good analysis on whether the figma adobe merger would have been good or bad for consumer welfare
@debarghya_das Deedy on x
$20B acquisition of Figma at then ~$400M ARR, one of biggest acquisitions of all time, didn't go through. Hoping for a huge IPO for Figma!
@mattturck Matt Turck on x
A 15-month regulatory process forcing Adobe and Figma to give up on their deal, when Generative AI completely changed the design game in the meantime anyway 🙄
@soleio @soleio on x
The truly great founders and companies flourish over the long term Long @zoink Long @figma
@nathanbenaich Nathan Benaich on x
Figma's founding vision was to “eliminate the gap between imagination and reality.” Regulators could learn a thing from that vision. Truly sad of a result 😔
@scottbelsky Scott Belsky on x
disappointing outcome, but just want to thank our community & Figma's community for all the support and excitement re: the possibilities. so much respect for @zoink and the whole @figma team - they have such a bright future, and I know we'll look for ways to partner to bring some…
@lulumeservey Lulu Cheng Meservey on x
@zoink Figma's best days are ahead 💯
@julianklymochko Julian Klymochko on x
*ADOBE AND FIGMA MUTUALLY AGREE TO TERMINATE MERGER PACT Remember it was struck at 100x sales to take out its biggest competitor
@its_txbrown Ricardo on x
Well, I am super happy today! “Adobe abandons $20 billion acquisition of Figma” https://www.theverge.com/...
@invesquotes Leandro on x
Figma and $ADBE agree to terminate merger. Looked increasingly likely and here it is. I honestly think that with the recent wave of generative AI the Figma acquisition was less necessary for Adobe, more so for $20 billion. [image]
@buccocapital BuccoCapital Guy on x
Adobe x Figma acquisition is off World is hostile to big acquisitions going forward. Completely changes the game
@friedmandave Dave Friedman on x
Interesting though not surprising. VCs and startups continue to have à significant liquidity problem. Hard to see how it remains a viable asset class if this isn't solved.
@steveruizok Steve Ruiz on x
Wow, so this means the $1B fall through fee goes to Figma? Huge
@pitdesi Sheel Mohnot on x
Adobe <> Figma merger is off, they didn't get regulatory approval. There will be a lot fewer big $ acquisitions as the US, UK and EU are all hostile towards them.
@zoink Dylan Field on x
After an intense 15 months of review, today Adobe and Figma have decided to end our pending merger, as we no longer see a path toward regulatory approval of the deal. https://www.figma.com/...

Chronicles