Adobe has announced the cancellation of its $20 billion deal to acquire Figma, a web-based collaborative platform, citing regulatory roadblocks related to antitrust approvals in Europe and the UK. The cash-and-stock deal, which was announced in September of the previous year, faced scrutiny from regulators concerned about the potential impact of Big Tech acquisitions on market competition.
As part of the termination of the deal, Adobe will pay a $1 billion termination fee to Figma, the San Francisco-based company known for its web-based collaborative platform used by various firms, including Uber, Coinbase, and Zoom Video Communications.
Figma has experienced significant growth, expanding its team from 800 to 1300 people over the past year. The company is expected to achieve a 40% growth in annual recurring revenue, surpassing $600 million this year. Figma has also demonstrated financial strength, achieving cash-flow positivity, a key metric for potential IPO candidates.
The cancellation of the deal follows concerns raised by the Competition and Markets Authority (CMA) in the UK, which stated that the acquisition would harm innovation in software used by a majority of UK digital designers. Similar concerns were expressed by the European Union regarding potential competition reduction.
This development underscores the challenges that major tech companies face in navigating regulatory approvals for acquisitions, especially when concerns are raised about the impact on competition and innovation in the market.