Adobe’s $20 billion Figma deal ranks as company’s biggest acquisition

Adobe Inc.’s planned acquisition of online design platform Figma Inc. is Adobe’s largest transaction to date.

Adobe, based in San Jose, Calif., has agreed to acquire Figma in a cash and stock deal worth approximately $20 billion, according to a Sept. 15 press release. Figma shareholders will receive approximately $10 billion in cash and approximately $10 billion in stock, subject to adjustments.

Adobe intends to finance the cash portion of the transaction using available cash and, if necessary, a term loan. The company will also issue approximately 6 million additional restricted stock units to Figma co-founder and CEO Dylan Field and employees over a four-year period after the transaction closes.

Field said in an official blog post that the deal has been in the works for the past few months. The exec said Figma would continue to run standalone under Adobe despite the “big change” to come.

The reported deal value is 2x Figma’s current valuation of $10 billion, which it reached in 2021 after raising nearly $200 million in a Series E funding round with the help of of several private equity investors.

Adobe’s largest acquisition before Figma was its $4.75 billion purchase of marketing software provider Marketo Inc. in 2018. The company’s recent acquisitions include work management platform Workfront Inc. in 2020 for $1.5 billion and cloud video software company Frame.io Inc. in 2021 for approximately $1.28 billion.

Adobe unveiled the Figma acquisition amid fiscal fourth-quarter revenue guidance that fell short of Wall Street expectations. The diversified software maker expects revenue in the quarter to hit $4.52 billion, below analyst forecasts of $4.60 billion.

Nonetheless, Adobe managed to achieve 15% year-over-year revenue growth at constant currencies for its fiscal third quarter to $4.43 billion.

Adobe Chairman and CEO Shantanu Narayen has expressed confidence in the company’s future after the Figma acquisition, even as Adobe deals with a growing customer base that includes students, creative and business professionals.

“We’re in the golden age of design, and we believe we have a unique opportunity to usher in a new era of collaborative creative computing,” Narayen said during the company’s May 15 earnings call. september.

Adobe is best known for its graphic design and video editing software, including Adobe Photoshop, Adobe Illustrator, and Adobe Premiere Pro, which are part of the company’s Creative Cloud suite. Figma, with its collaboration capabilities, would be able to help accelerate the web delivery of Creative Cloud technologies.

San Francisco-based Figma offers a line of cloud-based products similar to digital whiteboards. Such tools allow designers and others in related professions to jointly create and share design iterations.

Adobe and Figma expect their deal to close in 2023, subject to regulatory clearances, Figma shareholder approvals and other customary closing conditions.

Adobe retained Allen & Co. LLC as financial advisor and Wachtell Lipton Rosen & Katz as legal advisor for the transaction. Qatalyst Partners LP served as financial advisor to Figma, while the company engaged Fenwick & West LLP as legal advisor.

After the deal closes, Field will continue to lead Figma and report to David Wadhwani, president of Adobe’s digital media business.

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