Media and document solutions provider Adobe (NASDAQ:ADBE) and Figma have mutually terminated their proposed merger deal. The two companies had agreed to merge in a $20 billion deal in September.
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While both companies still believe that a combination would prove fruitful, the termination of their M&A deal follows a plethora of regulatory challenges. Adobe noted that the deal termination comes as “There is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority (CMA).”
The CMA feared that the deal would “Eliminate competition” and “Remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products.” The EU also raised apprehensions that the deal might thwart competition in the interactive product design tools market. Still, final verdicts in both regions were expected in February 2024.
However, Adobe and Figma seem to have blinked well ahead of this timeline. Meanwhile, Adobe is also facing an investigation from the Federal Trade Commission over its disclosure and subscription cancellation practices.
Is Adobe a Buy, Sell, or a Hold?
Overall, the Street has a Moderate Buy consensus rating on Adobe. Following a nearly 78% jump in the company’s share price over the past year, the average ADBE price target of $645.81 implies a modest 10.5% potential upside in the stock.
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