A UK competition regulator has moved to review Adobe’s A$29bn proposed aquisition of Figma, a design software company.
The first regulator to officially launch a query into this deal is The UK Competition and Markets Authority, however the US and Brussels are expected to be close behind.
The UK hic up comes nine months after the announcement of Adobe trying to buy Figma a US Company.
Adobe has said it expected, “lengthy reviews of transactions” in the “current robust regulatory environment.”
They are in talks with regulators from Brussels, the US, and the UK.
Adobe admits to looking forward to “continuing to engage with the Department of Justice, CMA and European Commission in productive discussions about the businesses, markets and positive economic impacts this deal will bring as they conduct their reviews.”
Adobe chair and chief executive Shantanu Narayen has advised the combination will be “transformational.”
$20bn purchasing price is twice the amount Figma was valued at in 2021, and 10x the value in 2019. This bid valued Figma at 50x the annual recurring revenue.
At this time, this was the most expensive bid of a private company, beating out Facebook’s $19bn takeover of WhatsApp in 2014.
Brussels has not yet launched an investigation, but it has been reported that regulators are worried this transaction will be removing a competitor from the market, leading to higher barriers and less innovation for rivals.
Both Adobe and Figma presented information to the US Department of Justice as they deliberate whether to open formal antitrust proceedings.
The announcement comes one week after Microsoft’s $75bn acquisition of Activision Blizzard was blocked, showcasing the tough stance on tech deals.
Both companies revealed that a heavy hand from the CMA could lead to a halt in tech investment and innovation in the UK.
“The concern Adobe has, if you decide to take a policy position against this . . . as a government that we should have fewer mergers, I think the natural consequence of that is you’re going to see less investment in start-ups because [investors] are currently getting their return through acquisitions, not through public offerings,” a person close to Adobe said.
Adobe’s defense is that this market is vibrant where others can still thrive, complimenting the combination of Adobe and Figma.
Adobe has plans to argue the two don’t compete with one another in the same market and found only 10% of Photoshop users also used Figma.
The CMA is expected to make a decision on launching an in-depth investigation by June 30th.
