The $20 billion deal between Adobe and Figma has been terminated due to concerns expressed by the UK and European Union over its impact on competition. The merger was to see Adobe acquire Figma for a combination of cash and stock consideration. The UK’s Competition and Markets Authority investigated the merger and discovered that it could harm the digital design sector. The European Commission cited similar concerns. Figma is currently the leader in product design software and is widely used by designers, creative agencies, and business enterprises to develop top-tier websites and applications for millions of users.
Adobe is a major competitor of Figma in product design software, where its Adobe XD product offers competition. Adobe is also the largest supplier of image editing and illustration software, renowned for its Photoshop and Illustrator applications. More UK businesses than ever are dependent on design software to promote their products and services via websites and applications. The CMA’s research indicates that about 80% of the professional product design market relies on Figma’s software.
Adobe and Figma have agreed mutually to terminate the transaction, stating that there is no clear way to receive required regulatory approvals from the European Commission and CMA. Adobe will pay Figma a termination fee. The regulators are opposed to the proposed deal and were expecting structural divestments as a significant concession to clear the deal. The regulatory situation has become complicated for big tech in recent times.
Shantanu Narayen, CEO, and chair of Adobe said: “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.” Dylan Field, CEO, and Co-founder of Figma added that while they were disappointed with the outcome, they are excited to find other ways to innovate on behalf of their respective communities with Adobe.