UK and EU kill Adobe and Figma's $20 billion takeover deal - what now?

Stuart Lauchlan Profile picture for user slauchlan December 18, 2023
It was always a hugely ambitious gambit, but the game's up for Adobe and Figma's acquisition plans.


What a difference a few days can make in the tech sector. Only five days ago, Adobe CEO Shantanu Narayen told analysts about his firm’s planned $20 billion acquisition of Figma that: 

We remain excited about the strategic opportunity with Figma, to jointly advance product design, accelerate collaborative creativity on the web, and redefine the future of creativity and productivity. We continue to engage with the European Commission, the Competition and Markets Authority (CMA) in the UK, and the US Department of Justice (DoJ), as they conduct their regulatory reviews.

Flash forward to today and after 15 months of effort, the deal’s off!

In a blog post, Figma co-founder and CEO Dylan Field announced that the two firms have given up trying to get approval for the acquisition: 

Figma and Adobe have reached a joint decision to end our pending acquisition. It’s not the outcome we had hoped for, but despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal.

We entered into this agreement 15 months ago with the goal of accelerating what both Adobe and Figma could do for our respective communities. While we leave that future behind and continue on as an independent company, we are excited to find ways to partner for our users.

In the Adobe formal announcement, Field is quoted as stating: 

Going through this process with Shantanu, David [Wadhwani, president, Digital Media Business, Adobe] 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. 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.

Meanwhile Narayen says: 

Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently. 

Interestingly, Adobe explicitly blames non-US regulators for the collapse of the deal, arguing: 

There is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.

How the wider US tech sector - and indeed, legislators in Washington - read that remains to be seen, but may well have wider implications. Last week it was also revealed that Adobe is being investigated by the US Federal Trade Commission over its subscription cancellation policies, a probe that the firm admits may leave it exposed to “significant monetary costs or penalties and could have a material impact on our financial results and operations”. 

Both UK and EU regulators were due to make final rulings in February next year, while the US Department of Justice hadn't provided a deadline for its own ruling, but it was expected "soon" according to Narayen last week. Given how long the approval process has rumbled on and given that final decisions were only a couple of months away, it's intriguing to wonder what has occurred to convince both firms that they were on a losing streak?

So what happens next? Each company probably has a different path to travel. Adobe CEO Narayen had made enormous play of the importance of this deal. Backing away from that vision will be a challenge. Adobe now has to pay Figma a “previously agreed upon termination fee”. 

For his part, Figma’s Field says: 

Figma’s founding vision was to “eliminate the gap between imagination and reality.” The shift from a physical economy to a digital economy and huge advances in AI have combined to make this aspiration feel even more urgent and within reach today than it did 11 years ago.

This will be our focus moving forward. We want to make it easy for anyone to design and build digital products on a single multi-player canvas - from start to finish, idea to production. I’m so excited for what the future holds and beyond grateful to our community for supporting us. Figma’s best, most innovative days are still ahead. See you all in 2024!

My take

The rather colorful use of “abandoning” in Figma’s blog post headline is perhaps indicative of just what a big deal this is - or rather isn’t.

Frankly, our view at diginomica is that this plan was always going to be a stretch. And someone, somewhere, is going to have to walk - and we’re not betting it will be anyone at Figma. 

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