Software maker Adobe (NASDAQ:ADBE) took a bit of a hit in early trading on Friday before recovering as the afternoon session went on. Adobe’s plan to buy Figma came with some unexpected and unfortunate resistance from U.K. antitrust authorities.
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The Competition and Markets Authority (CMA) in the U.K. came out swinging, noting that the Figma deal “…could mean less choice for designers of digital apps, websites, and other products.” Which it certainly could; one less competitor in the market is one less, no matter how you slice it. The regulator went on to note that Adobe had been investing heavily in such design sectors itself, and should Adobe ultimately buy Figma, that “…important rivalry could be lost….”
Thus, the $20 billion deal between the two firms is likely on hold as the CMA fires up a thorough investigation, known as “phase 2.” Figma and Adobe both will have five days to offer up proposals that will put an end to the CMA’s concerns about competition in the market. The CMA has had its eye on the Adobe/Figma deal since April, a TechCrunch report noted, and it’s not alone. The U.S. Department of Justice is also readying a lawsuit to shut down the deal, something the department has done on several occasions of late.
With or without the Figma deal, though, analysts are still largely on Adobe’s side. With 16 Buy ratings, 11 Holds, and one Sell, Adobe stock is considered a Moderate Buy by analyst consensus. Further, Adobe stock offers investors 10.87% upside potential thanks to its average price target of $542.94 per share.
