Adobe and Figma call off $20 billion acquisition after regulatory scrutiny



In response to increasing regulatory pressure from both the UK and the EU, Adobe and Figma jointly announced on Monday the mutual termination of their merger agreement. This agreement would have entailed Adobe’s acquisition of the Figma product design platform for $20 billion.

Following the termination, Adobe will be obligated to pay Figma a reverse termination fee amounting to $1 billion in cash.

“While Adobe and Figma strongly dispute the recent regulatory findings, we believe it is in the best interests of both companies to proceed independently,” stated Shantanu Narayen, Chair and CEO of Adobe. “Although Adobe and Figma shared a vision to redefine the future of creativity and productivity together, we remain well-positioned to leverage our significant market opportunity and pursue our mission to revolutionize the world through personalized digital experiences.”

Regulators expressed concerns about Adobe’s near-monopoly in the design software market, which led to resistance against the proposed merger. The fear was that Adobe’s acquisition of Figma, a rapidly growing product design platform currently surpassing Adobe’s rival XD application in popularity, could stifle innovation that might have flourished had Figma continued independently. Designers echoed similar concerns since the merger was first announced in September 2022, although Adobe consistently refuted these claims during the ongoing investigations.

In a letter dated December 14th, Adobe rejected the remedies proposed by the UK’s Competition and Markets Authority (CMA) to approve the merger after an extensive antitrust probe. The CMA recommended that Adobe undertake a significant divestment of assets, source code, and engineers to “restore the conditions of competition.” All parties were scheduled to discuss the CMA’s provisional decision to block the deal on December 21st, with a final deadline for approval or rejection set for February 25th.

The European Commission was conducting a similar scrutiny of the deal, and Bloomberg reported in February 2023 that the Department of Justice (DOJ) was preparing parallel investigations. Following Adobe’s announcement, the European Commission has also concluded its antitrust investigation into the merger.

Given the mounting regulatory pressure, Adobe faced limited options to advance the deal and acquire all the Figma assets it had originally sought. The outcome is not as anticipated by Figma CEO Dylan Field, who remarked, “Despite dedicating thousands of hours to engaging with regulators worldwide to highlight the distinctions between our businesses, products, and target markets, we no longer see a viable path toward regulatory approval of the deal.