Adobe abandons its $20B Figma acquisition plan amid regulatory scrutiny

Adobe has decided to drop its $20 billion strategy to buy Figma as they have concluded that there’ll be no straightforward approval from the regulators in the UK and European Union.

An agreement has been signed between the two parties resolving all matters related to the unsuccessful deal. Adobe will now proceed with the payout of $1 billion as a termination fee to Figma, the cooperative design platform; this was an agreement previously made between the two.

In November, both the UK’s Competition and Markets Authority (CMA) and the European Commission expressed apprehension about the proposed takeover’s effect on competition. The CMA’s preliminary findings suggested that the merger could potentially “eradicate competition between two primary competitors.” The competition authority indicated it was contemplating whether to prohibit the deal or compel Adobe to divest Figma’s primary product, Figma Design, alongside Adobe XD.

Earlier on Monday, Adobe claimed that it wouldn’t offer the CMA any potential remedies. “It is clear that no realistic remedy would satisfy the concerns the CMA is maintaining,” an Adobe spokesperson told Bloomberg. “We believe that the best path forward is to continue our ongoing engagement with the CMA on the merits.”

The European Commission issued a Statement of Objections to Adobe last month, cautioning that its proposed takeover of Figma “might diminish competition in the global markets for interactive product design software and other creative design software,” which would include vector editing tools (like Illustrator) and raster editing tools akin to Photoshop. The Commission intended to make a final decision on the merger by February 5th. Adobe had initially shown a willingness to propose potential solutions to appease European regulators, but now it seems that this is no longer the situation.

Shantanu Narayen, Adobe chair and CEO, said in a statement;

Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.

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

At the same time, Adobe was expecting possible legal action from the US Department of Justice to stop the deal on the home front. Adobe and Figma were reported to have met with officials from the Department of Justice just last week in an attempt to gain approval for their merger.