Adobe is building collaborative design muscle with $20 billion deal for Figma

The Adobe logo is seen on a smartphone in this illustration taken on June 13, 2022. REUTERS / Dado Ruvic / Illustration

Sept 15 (Reuters) – Adobe Photoshop Inc said on Thursday it will buy start-up Figma for about $20 billion in its biggest deal, scaling up the volume of apps that support online collaboration amid a global shift to hybrid work.

The cash-and-share deal will give Adobe ownership of a company whose online collaborative platform is being used for designs and brainstorming by companies ranging from Zoom Video Communications (ZM.O) To AirBnB and Coinbase (COIN.O).

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

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

However, shares are down 13% in early trading. Some analysts have indicated the size of the deal could require Adobe to raise debt. The company had cash and cash equivalents of $3.87 billion as of September 2.

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

“It tends not to be a great sign when a company has to acquire to defend its stake. It’s not a sustainable solution.”

CNBC report last month said thousands of Microsoft (MSFT.O) The employees were using Figma, which put pressure on the close relationship the software giant shares with Adobe. Cross-device distribution running on Windows has helped Adobe gain ubiquity and companies also sync their products across platforms.

The deal is expected to close in 2023 and Dylan Field will continue to lead San Francisco-based Figma. Either company would have to pay a $1 billion termination fee if it canceled the deal.

Meanwhile, Adobe’s fourth-quarter revenue forecast of $4.52 billion fell short of the $4.58 billion analysts estimate, according to Refinitiv data.

Third-quarter profit also fell about 6%, reflecting the damage from a stronger dollar and higher costs.

Additional reporting by Shafi Mehta and Tayashi Datta in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila

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