The planned $20 billion purchase of Adobe Inc. from design software maker Figma Inc. risks being blocked by the UK competition watchdog unless it offers measures to resolve competition issues.
The Competition and Markets Authority said its early view is that the deal could eliminate competition in product design software, reduce development of new products and eliminate Figma as a competitor, according to a statement on Tuesday. The decision complies with the regulator of the European Union, which sent a list of objections to Adobe earlier this month.
Shares in California-based Adobe fell 0.7% in premarket trading.
The inquiry sets the table for a protracted probe of the CMA after it emerged bruised by its public merger battle with Microsoft Corp. on top of the $69 billion Activision Blizzard Inc. acquisition. An agreement that was finally approved after months of twists and turns.
The head of the CMA, Sarah Cardell, warned that companies wanting to get a deal in the UK should not follow Microsoft’s tactics by dragging out the merger process and offering viable remedies too late. The US Department of Justice was said to be preparing a lawsuit against the deal earlier this year but has yet to issue proceedings.
The purchase of Adobe, the largest-ever takeover of a private software company, is seen as a massive bet that more creative work will be done by small businesses and everyday users on the web, a market that Figma has quickly captured. While Adobe has introduced less expensive products for that audience, most of its offerings are still heavy software aimed at specialists.
The EU has warned that it may block the deal if adequate measures are not offered. Senior corporate executives will travel to Brussels for talks with EU merger officials – tentatively scheduled for Dec. 8, according to people familiar with the matter.
The CMA said it was now considering whether to block the merger or whether delisting could resolve its concerns. It said that it would consider the sale of a product of each of the overlapping software of the company. The watchdog will make a final decision by February 25.
“We are disappointed with the CMA’s findings and disagree with the CMA’s outlook on this transaction,” an Adobe spokesperson said.
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Updated: 28 Nov 2023, 20:06 IST