UK regulator opens probe into Adobe's $20bn Figma acquisition

CMA investigating whether the deal would lead to a significant reduction in competition in UK markets for goods or services

The UK's antitrust regulatory agency on Wednesday announced an investigation into Adobe's proposed $20 billion deal to acquire cloud-based designer platform Figma.

The Competition and Markets Authority (CMA) stated that it is examining whether this deal, which was announced in September last year, would lead to a significant reduction in competition in any of the UK's markets for goods or services.

The CMA has invited feedback from any concerned party to aid its evaluation.

The regulatory body has established 30th June as the deadline for the first phase of its verdict on the transaction.

In response to the CMA's investigation, Adobe stated on Wednesday that it anticipates prolonged "reviews of transactions" in the current stringent regulatory climate.

The company further said that it looked forward to constructive discussions with the US Department of Justice (DOJ), the CMA and European Commission regarding the businesses, markets and positive economic impacts that the acquisition would bring as they undertake their assessments.

Figma said it continues to work positively with the CMA as the investigation proceeds.

In September last year, Adobe confirmed its proposal to acquire Figma for $20 billion, with its CEO Shantanu Narayen expressing the view that the partnership would be "transformational".

Adobe's offer price for Figma was twice the valuation that Figma had received in its most recent private funding round in 2021 and ten times its valuation in 2019.

The bid placed the company's value at 50 times its annual recurring revenue.

Figma, headquartered in San Francisco, provides a web-based creative tool that facilitates remote collaboration among designers.

While the CMA is the first regulatory authority to initiate an investigation into the proposed acquisition, it is anticipated that the US and EU will follow suit.

In February, the European Commission revealed that it was scrutinising the deal on competition grounds, indicating that the deal could potentially have an impact on the market for interactive product design and whiteboarding software.

Despite the regulatory hurdles, Adobe said it remains optimistic that the acquisition will be completed by the end of this year. In March, the company disclosed that it was collaborating with the DOJ to secure approval for the transaction.

Adobe and Figma have submitted details to the DOJ as the government assesses whether to launch formal antitrust proceedings, according to people familiar with the matter who spoke to the Financial Times.

It is expected that Adobe will argue in its defence that the market in question is highly competitive, with ample opportunities for others to flourish, and will emphasise that Adobe and Figma are mutually beneficial to each other.

The Adobe-Figma acquisition is the most recent in a series of mergers and acquisitions that the CMA has opted to investigate.

Last week, the regulatory agency blocked Microsoft's $75 billion purchase of Activision Blizzard, illustrating its tough stance on tech transactions that it deems to pose a threat to competition.

Last month, the CMA published a timetable and an Issues Statement on Broadcom's planned $61 billion takeover of VMware, outlining its concerns about the deal. The regulator aims to deliver a final report on the matter in late August, while Broadcom has set a deadline of 31st October to complete the acquisition.