Adobe Defends ‘Transformative’ $20bn Deal For Figma

Adobe has justified its $20 billion (£17.5bn) deal to acquire design collaboration firm Figma, calling it a “transformative” moment that will take the company into a new era.

Prior to the Figma acquisition, announced late last week, Adobe’s biggest-ever deal was its $4.75bn acquisition of Marketo in 2018.

The deal snaps up one of Adobe’s biggest potential rivals, a competitor to its Adobe XD vector design tool and a pioneer in building sophisticated design apps that run directly in a web browser.

Figma was founded in 2012 after its co-founders Dylan Field and Evan Wallace dropped out of Brown University at age 19 to accept a $100,000 grant from libertarian financier Peter Thiel.

Collaboration

The offering allows online collaboration on interface and user experience design and in addition to the web app offers offline tools for macOS, Windows, Android and iOS, with a feature set that includes vector graphics editing and prototyping tools.

Along with Australian start-up Canva, Figma is a leader in a new generation of browser-based design tools that have changed the game in an industry that has long been dominated by Adobe.

The purchase price, which is to be paid half in cash and half in stock, is double what Figma was valued at in its most recent funding round in 2019 and is 50 times Figma’s annual recurring revenue, which Adobe said would top $400m this year.

The large premium triggered a sell-off of Adobe’s stock late last week, wiping 16.8 percent from its value on Thursday, or about $29bn.

‘New categories’

Adobe’s cautious outlook for the fourth quarter, announced on the same day, also contributed to the stock drop.

Adobe chief executive Shantanu Narayen said the deal would help the firm continue to “create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions”.

“The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity,” he said.

In addition to investors, some designers voiced concerns about the deal, with one social media user saying they hoped Adobe would retain Figma’s “simplified” interface.

‘Amazing and free’

“Figma is amazing and free. And I’m sure that will be changing soon,” another user wrote on Reddit.

A third user said they were “pissed off” and that Adobe had “a real stranglehold on design software”.

US antitrust authorities, which have recently been taking a closer look at acquisitions by big tech companies such as Amazon, haven’t yet commented on the Figma deal.

When signed the deal was the most expensive ever of a US private company, ahead of Facebook’s $19bn acquisition of WhatsApp in 2014, but the decline in Adobe’s stock price pushed it down to $18.3bn by the end of Thursday.