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Adobe (ADBE) to acquire design software firm Figma for $20 billion

Figma has agreed to be acquired by Adobe for $20 billion because we can't have nice things.

Asif Khan

September 15, 2022 10:20 AM

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Adobe has announced that it has agreed to acquire collaborative design platform Figma for $20 billion of cash and stock. The company stated that "the combination of Adobe and Figma will usher in a new era of collaborative creativity." Adobe also reported their Q3 2022 earnings results with EPS of $3.40/share beating expectations of $3.33/share, and revenues of $4.43 billion coming in-line with Wall Street's projections. The company did provide somewhat disappointing revenue guidance for Q4 2022, which paired with today's Figma deal has ADBE stock trading down over 16% today.

“Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, chairman and CEO, Adobe. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

“Figma has built a phenomenal product design platform on the web,” said David Wadhwani, president of Adobe’s Digital Media business. “We look forward to partnering with their incredible team and vibrant community to accelerate our joint mission to reimagine the future of creativity and productivity.”

"With Adobe's amazing innovation and expertise, especially in 3D, video, vector, imaging and fonts, we can further reimagine end-to-end product design in the browser, while building new tools and spaces to empower customers to design products faster and more easily,” said Dylan Field, co-founder and CEO, Figma.

Figma was founded in 2012 by Dyland Field and Evan Wallace. The company's service is known for providing collaborative design solutions on a web-based client. Figma currently operates with tremendously high gross margins of 90% and is likely to grow going forward now that Adobe is here to accelerate revenue growth. 

Here are the details of the $20 billion deal:

Under the definitive agreement, Adobe has agreed to acquire Figma for approximately $20 billion, comprised of approximately half cash and half stock, subject to customary adjustments. Approximately 6 million additional restricted stock units will be granted to Figma’s CEO and employees that will vest over four years subsequent to closing. Adobe expects the cash consideration to be financed through cash on hand and, if necessary, a term loan. The transaction is expected to close in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions, including the approval of Figma’s stockholders.

Upon the closing of the transaction, Dylan Field, Figma’s co-founder and CEO, will continue to lead the Figma team, reporting to David Wadhwani, president of Adobe’s Digital Media business. Until the transaction closes, each company will continue to operate independently.

While it sort of stinks to see such a useful product and viable competitor like Figma get gobbled up by a much larger company, it appears that Adobe plans to let the company continue to operate on its own.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.