Digital media and marketing software firm Adobe on Monday announced that it has canceled its $20 billion acquisition of Figma after running into regulatory roadblocks. ADBE stock rose on the news.
Adobe and Figma mutually agreed to end their planned merger, which they announced in September 2022. The companies saw "no clear path" to receiving the necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority, Adobe said in a news release. The U.S. Department of Justice also was scrutinizing the deal.
"Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently," Adobe Chief Executive Shantanu Narayen said in a statement.
Adobe will pay Figma a termination fee of $1 billion for ending the deal. Figma provides a web-first collaborative design platform.
With the Figma deal finished, several Wall Street analysts said they expect Adobe to increase its share buybacks.
ADBE Stock Bounces Of 50-Day Line
On the stock market today, ADBE stock climbed 2.5% to close at 599.13.
Last week, Adobe beat Wall Street's targets for its fiscal fourth quarter but missed views with its sales guidance. ADBE stock fell after the Q4 report but it found support at its 50-day moving average line.
Analysts said it is taking longer than expected for Adobe to monetize its innovations in generative artificial intelligence. Even Adobe executives admitted as much.
"It's going to play out over time," Chief Financial Officer Dan Durn told Investor's Business Daily late Wednesday. "It's not going to be a one-year sugar high."
The new AI tools will bring more users into the Adobe ecosystem, Durn said. Artificial intelligence presents "three massive opportunities" for Adobe, he said. It provides new growth prospects for the company's Creative Cloud, Document Cloud and Experience Cloud.
Meanwhile, ADBE stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
