Adobe and Figma call off $20B merger deal; the former will pay $1B “reverse termination” fee to the latter

Adobe and Figma, on Monday, December 18, announced that they have mutually agreed to terminate their merger agreement following the mounting pressure from regulators in the UK and EU 

The merger was originally announced on September 15, 2022, and would have seen Adobe acquiring Figma for $20B (mix of cash and stock).

Figma is a cloud-based design and prototyping tool used for collaborative interface design and user experience (UI/UX) design.

The tools enable designers to work together in real-time, allowing multiple team members to collaborate on the same design projects simultaneously.

The announcement came after the decision based on their shared assessment, indicating an absence of a clear pathway to secure the required regulatory approvals from the European Commission and the UK Competition and Markets Authority.

“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,” says Dylan FieldCo-founder & Chief Executive Officer, Figma.

Both companies have signed a termination agreement that resolves all outstanding matters from the transaction, including Adobe paying Figma the previously agreed-upon termination fee of $1B in cash.

Adobe x Figma: Concerns

Regulators raised concerns about the proposed merger, citing Adobe’s dominant position in the design software market. They opposed the deal, emphasising Adobe’s near-monopoly status. 

The acquisition of Figma prompted fears among regulators that it could suppress the innovation that might have thrived had Figma remained independent. 

Designers shared similar concerns following the merger announcement in September 2022, while Adobe consistently challenged these claims during the ongoing regulatory investigations.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” says Shantanu Narayen, chair and CEO of Adobe. 

“While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalise on our massive market opportunity and mission to change the world through personalised digital experiences.”

“Going through this process with Shantanu, David 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,” said Dylan Field, co-founder and CEO, Figma. 

“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,” he adds.