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Wednesday, September 28, 2022

Adobe Inc signs US$20bln deal to acquire cloud-based designer platform start-up Figma

Adobe Inc said it has agreed to acquire cloud-based designer platform Figma for US$20 billion in a cash-and-stock deal, in the biggest buyout of a privately-owned software startup company.

Figma’s web-based collaborative platform for designs and brainstorming is popular among tech firms including Zoom Video Communications, Airbnb Inc and Coinbase.

In a statement, Adobe chief executive officer Shantanu Narayen called Figma’s business “the future of work” and said there were “tremendous opportunities” in combining it with his company’s offerings, such as document reader Acrobat and online whiteboard Figjam.

Adobe said it expects the deal to be accretive to its earnings three years after its completion. It noted that Figma’s total addressable market would reach $16.5 billion by 2025 across design, whiteboarding and collaboration. The deal is expected to close in 2023, subject to regulatory approvals.

San Francisco-based Figma will continue to be led by its co-founder and chief executive officer Dylan Field and operate independently. Either company will have to pay a termination fee of $1 billion if they scrap the deal.

The big price being paid marks a major exit win for Figma’s venture capital backers, including Index Ventures, Greylock Partners and Kleiner Perkins.

Adobe is one of the most acquisitive companies in the Silicon Valley and has bought numerous businesses over the years, as it has looked to defend market share against competitors. Prior to Figma, its largest acquisition was that of software maker Marketo for $4.75 billion in 2018.

Adobe accompanied the big acquisition news with a fourth-quarter revenue forecast of $4.52 billion, below the $4.58 billion estimated by analysts. The company’s third-quarter profit fell nearly by 6%, reflecting the hit from a stronger US dollar and higher costs.

Contact the author at jon.hopkins@proactiveinvestors.com

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