In a surprising turn of events, Adobe’s $20 billion acquisition bid for Figma has officially collapsed, spelling the end for what could have been a transformative union in the design and digital asset creation space.
The demise of the deal comes in the wake of regulatory challenges in Europe, where the European Commission and the U.K. Competition and Markets Authority expressed significant reservations about the acquisition’s potential impact on competition and innovation.
The joint press release from Adobe and Figma stated that, despite both companies believing in the merits of the combination, they mutually agreed to terminate the transaction due to the lack of a clear path to obtain necessary regulatory approvals in Europe.
“Although both companies continue to believe in the merits and procompetitive benefits of the combination, Adobe and Figma mutually agreed to terminate the transaction based on a joint assessment that there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority,” said Adobe.
The U.K. had already raised concerns in November, suggesting that the acquisition would harm innovation, prompting an in-depth investigation. Similarly, the EU had taken a similar stance in August, emphasizing Figma’s role as a “clear market leader” in interactive product design tools, constraining Adobe’s competition in the digital asset creation tools space.
Figma’s CEO, Dylan Field, acknowledged the disappointment in a blog post, noting the exhaustive efforts to highlight the distinctions between their businesses to regulators worldwide. Despite thousands of hours spent in discussions, the companies saw no viable route to regulatory approval, leading to the mutual decision to terminate 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,” said Field.
As a consequence, Adobe is now obligated to pay Figma a termination fee of $1 billion, stipulated in the contract in case of regulatory clearance failure or if the deal did not close within 18 months of its announcement in September. The termination of this significant acquisition underscores the complexities and challenges that large-scale mergers face in navigating global regulatory landscapes.