Adobe builds collaborative design muscle with $20 billion deal for Figma

The cash-and-stock deal will give Adobe ownership of a company whose online collaboration platform for designs and brainstorming is used by companies ranging from Zoom Video Communications to AirBnB and Coinbase.

“The combination of Adobe and Figma is transformative and will accelerate our approach to collaborative creativity,” Adobe CEO Shantanu Narayen said in a statement.

Adobe has increased its focus on the collaboration tools space through acquisitions in recent years. It acquired work management platform in 2020 and cloud-based video collaboration platform Frame.io last year.

However, shares fell 13% in early trading. Some analysts pointed to the size of the deal that Adobe may be seeking to raise debt. The company had $3.87 billion in cash and cash equivalents as of September 2.

“We are disappointed with the price we paid for the company (Figma),” said David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors, which owns 1.5% of Adobe.

“When a company has to buy to defend the stock it’s usually a great sign. It’s not a permanent solution.”

A CNBC report last month claimed that thousands of Microsoft employees were using Figma, putting pressure on the close relationship the software giant shares with Adobe. The distribution between machines running Windows helped Adobe achieve ubiquity, and the companies also synchronized their products across platforms.

The deal is expected to close in 2023 and will continue to be led by San Francisco-based Figma co-founder and CEO Dylan Field. Both companies will have to pay a $1 trillion termination fee if they pull out of the deal.

Meanwhile, Adobe’s fourth-quarter revenue forecast of $4.52 billion was below analysts’ estimate of $4.58 billion, according to data from Refinitiv.

Third-quarter earnings also fell nearly 6%, reflecting the impact of a stronger dollar and higher costs.