The DOJ Plans To Sue Adobe To Block The $20 Billion Deal For Figma

Shares of Adobe were down as much as 5% in extended trading after a report on Thursday that said the U.S. Justice Department was planning to file a lawsuit in order to block Adobe's $20 billion acquisition of startup Figma.

‍

In a report published by Trade Algo, which cited an unnamed source, the report indicated that a case may be filed as soon as next month.

‍

It is expected that the deal, announced in September, will help Adobe grow its portfolio as quickly as possible and acquire tech that could enhance existing programs in the Creative Cloud bundle that are used by business and independent designers. Figma is expected to generate over $400 million in annualized recurring revenue in 2022, according to Adobe.

‍

Adobe is taking a significant step towards closing the gap between itself and its rivals by taking over Figma, which is used by companies to design apps, and websites, and collaborate on ideas. A major player in the design software market is Adobe, which plays a major role in the design software market by offering the XD design tool, despite the fact that it failed to generate substantial revenues from it.

‍

During the past few years, the U.S. competition authorities have become much more prepared to take a hard line on the expansion plans of large corporations. Earlier this year, the United States Federal Trade Commission filed a lawsuit seeking to prevent Microsoft from completing the acquisition of video game publisher Activision Blizzard for an amount approaching $69 billion.

‍

“Adobe and Figma are a combination that will provide consumers with significant value, advance new product categories and technologies, and create new market opportunities as a result of the merger. We are thrilled to hear from Adobe's customers across the design space who are eager to take advantage of the benefits the merger will bring,” a spokesperson of Adobe told Trade Algo in an email.

‍

"Adobe and Figma focus on two very different product areas today, which are very different from each other. With its focus on building a collaborative web platform, Figma is one of the world's leading companies in interactive product design. It is no secret that Adobe is a leader in the creative tools space, helping millions of users create amazing visual content with their products. Together, our vision will enable millions of consumers to transform their productivity with creativity as we transform their productivity together. It is our intention to engage in constructive and cooperative discussions with regulators in the US, UK, and EU, as well as other countries," the spokesperson said in an email.

‍

The president of Adobe’s digital media business, David Wadhwani, who was a key figure in the deal with Figma, said in a conference call in December that the regulatory process is progressing as expected. During the second request process at the Justice Department, he said that Adobe was working on the deal while the federal agency examined it.

‍

Commentary from the Justice Department was not provided.

‍

Figma's deal with Adobe is still expected to close in 2023, according to the spokesperson.

‍