Adobe/Figma deal called off amidst regulatory push-back

In September 2022, Adobe made a $20 billion bid on San Francisco-based design software company, Figma. On December 18th, 2023, the parties announced the end of their 15-month pursuit of the merger. The news came as the prospect of regulatory approval in Europe became increasingly stark.

In the statement, it was noted that both parties still believe in the “merits and precompetitive benefits of the combination” but referred to a joint assessment that the regulatory hurdles from the European Commission and the UK Competition and Markets Authority (“CMA”) were the main drivers of the deal falling through. Just a few hours before the announcement on Monday, CMA published a document noting that Adobe refused to offer remedies to satisfy the regulator’s concerns. Since the deal’s inception, regulators were quick to raise concerns about the potential negative impacts on innovation posed by Adobe’s bid to remove a competitor from the marketplace.

The parties have agreed to mutually terminate the merger agreement, but Adobe is now required to pay a reverse termination fee of $1 billion to Figma. While this may signal a difficult road ahead for Figma in their pursuit to find another buyer, Figma has evidently undergone substantial growth in the last year, increasing its workforce from 800 to 1300 people and is expecting a 40% revenue increase this year. It will be interesting to observe the precedent this sets for other big tech mergers in Europe.