Adobe Systems Incorporated (Nasdaq: ADBE) has announced a definitive agreement to acquire Macromedia (Nasdaq: MACR) in an all-stock transaction valued at approximately $3.4 billion. Under the terms of the agreement, which has been approved by both boards of directors, Macromedia stockholders will receive, at a fixed exchange ratio, 0.69 shares of Adobe common stock for every share of Macromedia common stock in a tax-free exchange. Based on Adobe’s and Macromedia’s closing prices on Friday April 15, 2005, this represents a price of $41.86 per share of Macromedia common stock.
A statement in the press release for Adobe reads:
The combination of Adobe and Macromedia strengthens our mission of helping people and organizations communicate better. Through the combination of our powerful development, authoring and collaboration tools – and the complementary functionality of PDF and Flash – we have the opportunity to drive an industry-defining technology platform that delivers compelling, rich content and applications across a wide range of devices and operating systems.
By combining the passion and creativity of two leading-edge companies, we will continue driving innovations that are changing the ways people everywhere are experiencing and interacting with information.
John Kennedy reports for SiliconRepublic.com, “Bola Rotibi, a senior analyst with Ovum commented: ‘This acquisition is major news for the software industry, although not altogether surprising. Macromedia has regularly been seen as a prime candidate for acquisition. The deal itself is not without issues from a competition standpoint since the resulting business will almost certainly hold a sizeable chunk of the GUI market that would make it difficult for some smaller vendors to play in. The companies have overlapping product sets and a product portfolio that goes in many different directions. That is both a positive and a negative and will need to be addressed, going forward,’ Rotibi said.”
Kennedy reports, “Rotibi also warned that the transaction could result in anti-competition court cases arising from competitors’ inability to compete against what in effect will be a software juggernaut. ‘Adobe’s revenues are around $2bn and Macromedia’s are around $350m to $400m – the revenue potential of their combined market play and future potential is substantial. The compelling offering of a cross platform play that serves Microsoft’s own environment will make it a formidable competitor for the Redmond giant but we think it would have had trouble making its own bid for Macromedia on anti-trust grounds. Ultimately both Adobe and Macromedia both have superb cross platform technologies and if they can exploit the ubiquity of the PDF reader and Flash, and really emphasise the ‘any client anywhere’ theme they will be a in a formidable position to dictate industry directions for the future,’ Rotibi concluded.”
Full article here.
MacDailyNews Take: If approved, this deal would remove another strong competitor in the software space and leave an even smaller handful of major players. If fact, in the consumer software market, excluding games, only Adobe, Apple, and Microsoft immediately spring to mind as large companies that make a wide variety of software applications. Still, hurray at least for it’s tabbed palettes for everyone! So, what happens to Dreamweaver? Are we all going to be using GoLive soon?
This is grate! I love Macromedia but there programs don’t have that Mac feel like Adobes do. So hopefully this will fix that.
Yeah… apart from the fact that adobe never have had that great a relationship with apple!! they like dropping products for the mac and until recently charged more for the mac versions of their software than their pc counterparts.
I really hope they don’t scrap any of the new media side of programs, Adobe suck for those, where as macromedia rules… (dreamweaver, fireworks, flash, director).
I think that this is a good move for adobe but bad move for us that depend on software for a living! Macromedia have lead the web for years and adobe had lead print, I for one don’t think adobe can come up with the kind of things macromedia has for web development, otherwise they would have already!
The sky is falling, the sky is falling…
This is scary… Adobe is not as committed (other than Photoshop) to the Mac platform as Macromedia is. I was hoping that Apple would have acquired Macromedia eventually.
God I hope they don’t drop GoLive. It is lightyears ahead of Dreamweaver…
Anti-competitive and monopolistic in the extreme. Then again, competition doesn’t seem to have helped as Macromedia’s software couldn’t suck more in its most recent iterations. Both FreeHand and Dreamwweaver have headed steadily downhill since versions 5.5 and 2.0 respectively.
MDN magic word “test”: As in the sheer M$-like bloatedness, crash-proneness, and slow-ass performance of Macromedia’s MX versions of their software has severely TESTed my patience.
I find that this is a great opportunity if handled right. Adobe should integrate flash controls into Acrobat, to give Acrobat more interactive control and then use the better new media packages for design professionals and use the other ones for enterprise and home user solutions.
I use GoLive daily and would welcome any and all inovation that intigrating the Macromedia products could bring. I just hope this is not a repeat of the PageMaker/InDesign thing. InDesign still can’t open PDF files! They stop developement of PageMaker to improve the newly aquired InDesign but fail to make it so that it can open their own standard file format? That is just scary.
This is not good news for Apple or Macintosh users. This will do nothing more than reduce competition, product availability & variety. This will also make Apple more dependent upon a company that is increasingly a competitor, as Apple expands it’s software operations.
I’m sorry, this sucks. Macromedia was the only serious competitor to Adobe in a number of major products. Note the press release focuses on Flash, but what will happen to other Macromedia products like FireWorks, DreamWeaver, or even Freehand?
Admittedly, I prefer BBEdit and Adobe GoLive to DreamWeaver, but I acknowledged that DreamWeaver’s popularity kept both products growing and gaining. And while Photoshop is a powerhouse, I HATE using it, unless I absolutely have to. To that regard, GraphicConverter and FireWorks have become my day-to-day image editing tools, because most jobs DONT NEED Photoshop.
I’d guess if FireWorks goes away, I could go back to Debabilizer, but still, what a massive blow for software competition.
Any chance this will get stopped on anti-trust grounds?
can anyone say “MONOPOLY”?
the lack of competition will be bad for everyone…
An opportunity missed.
Apple should have used some of its $7 billion in cash, and $25 billion + in share valuation to take Macromedia and kept Adobe honest.
This sucks. What next? Adobe acquiring Quark? I love Adobe products, but this smells like a Microsoft move. Apple better have some secret Creative Suite killer under wraps and ready to release at a moment’s notice in case Adobe decides it’s just not worth developing for 2 platforms. On the other hand, Adobe needs Apple to help keep Microsoft at bay. If they were to stop developing for the Mac, Microsoft would have much more leverage.
I think this is great news!
Adobe will merge macromedia’s web suite into the adobe CS suite of apps.
I also think the firsy thing they will do is drop Freehand – which to be honest was crap compared to illustrator.
I predict Adobe will release in 2006 Adobe CS 3: Complete media edition. This will include: Photoshop, Illustrator, Indesign, Flash CS, Go-live CS (with all the features taken from dreamweaver).
With all this software in it’s arsenal, quark is basically dead.
I like both Adobe and Macromedia. But this is kind of scary. Competition keeps companies innovative. Besides that, Adobe and MM both have their own stars. I love Photoshop and InDesign and Illustrator, but hate GoLive. I like Dreamweaver and Flash, and would hate to see them nixxed. It wouldn’t hurt my feelings any to see FreeHand scrapped. It will be interesting to see how this pans out.
If Adobe doesn’t ruin Macromedia’s stuff, it’ll definitly overcharge for whatever it releases as “their” version of it. It’ll probably kill off Freehand ’cause of Illustrator. I don’t know too many people using it these days anyway. I used to love it. It was easier to learn and use than Illustrator. An ignoble death indeed. And DreamWeaver? Who knows what the child of it and GoLive (which they also bought) will be? The only guarantee: more expensive for the consumer. Too bad, I think.
MCCFR:
Uh.. which would.. kill Adobe support for the Mac.. as well (because of competition)
Either way, if all these companies are allowed to merge, you’re going to be tangled in so many conflicting interests that there will cease to be any true third party developers (hyperbole of course, but you get my drift)
If MS buys all it’s third party developers to keep them away from Apple, then.. well, they’re now 2nd party.
Adobe getting together with Quark is more interesting because, they do offer some different things. So instead of.. let’s merge we can own t his market.. it’s.. let’s build one company that is very good, but also very broad. That’s impressive.
Adobe has already said it gets about a third of its revenue from the Mac platform.. that’s quite a bit of dough to throw away just because you resent competition.
Childish? Yup. Farfetched? Ah, no..
Oh so now the “tabs” will be used by both companies (lawsuit). Whoopee!
I hope that the antitrust people take a good look at this one.
What about ColdFusion???? What happens to that??
Can you say oil industry-type price increases?
Perfectly said……
“An opportunity missed.
Apple should have used some of its $7 billion in cash, and $25 billion + in share valuation to take Macromedia and kept Adobe honest.”
Finally…Freehand dies. Fireworks…not far behind.
And as usual – hundreds lose jobs.
Gotta love these acquisitions.
Mike:
Not really, because Adobe has long since stopped treating the Macintosh as anything other than a “design & print” platform with the exception of GoLive.
Where is Premiere, or the DVD app, or Atmospheres, ro Adobe Graphics Server for the Mac? Nowhere.
Whereas Macromedia is now pretty much a New Media company, with some nice additional assets.