The most anticipated purchase of 2023 will not take place: Adobe will not buy Figma

Adobe and Figma, the cloud-based design tool, will end their planned $20 billion merger due to the obstacles that international regulators have been putting in their way.

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In a statement, the two companies said that “there is no clear path to obtain the necessary regulatory approvals from the European Commission and the Competition and Markets Authority of the United Kingdom”.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe that it is in the best interest of our respective companies to move forward independently,” wrote Shantanu Narayen, CEO of Adobe, in a statement.

Goodbye to a $20 billion agreement

Adobe first announced that it would acquire Figma in September 2020 in a cash and stock deal worth about $20 billion.

The news caused Adobe’s stocks to plummet, but the company reiterated that the acquisition would be a natural complement to Adobe’s portfolio, writing in the original announcement that “the combination of Adobe and Figma will mark the beginning of a new era of collaborative creativity.”

And worst of all, Adobe will pay Figma a breakup fee of $1 billion. The news represents a sudden turn from Narayen’s recent statements, who on Wednesday told CNBC that the company believed in the acquisition and its benefits for consumers.

Antitrust regulators have been increasingly scrutinizing numerous large and small technology deals. The CMA has also scrutinized Microsoft’s investment in OpenAI.

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“We will continue to look for ways to partner with Figma to meet our common customers’ needs,” wrote David Wadhwani, Senior Vice President of Adobe, in another blog post.