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 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.”
You’re nuts. Macromedia has its own Windows-only products, and Dreamweaver was known to be slower on the Mac than on Windows. I heard such bad things about it I never upgraded. Macromedia isn’t any more Mac friendly than Adobe. Adobe, on the other hand, offers more Mac products than most companies and Apple likes to use Photoshop to show off Macs.
We’ll have to wait and see how this plays out. A couple of things to think about though:
1. There will certainly be a lot of scrutiny about the monopoly potential. The deal may well be blocked.
2. Adobe will not discontinue Mac versions if those products are making money.
3. If Adobe do discontinue Mac versions because they are not viable, Apple will take up the slack if there is a market.
4. The Mac market is expanding again. There will be less incentive to kill Mac versions when significant profits can be made.
Also consider this; Adobe didn’t just decide one day to stop supporting the Mac for the hell of it. Final Cut Pro was a better product and was winning in the video field. Adobe had no reason to provide a distant second product. So they went Windows only on that product because there weren’t any Windows alternatives.
On the topic at hand, I’m a big time Freehand user. I hate to see it go away. It’s so much easier for me after years of use. I love its multi-page and long document capabilities and text formatting. I hardly ever use Quark or anything else other than Photoshop anymore. I have some on screen color issues that aren’t in Illustrator, but the output is accurate.
Anybody thinks this is good news is very shortsighted.
This obvious monopoly gives the arrogant suits at Adobe more leverage. Remember Adobe’s open letter when they suggested their Macintosh users switch to Windows? They need to be knocked off their high horse and now there’s no one to do it!
As an educator who can get a Macromedia site licence for a reasonable price but get screwed by Adobe for their products this can only be bad news.
Our students love Macromedia Suite and it is the mainstay of our programme. Just hope that Adobe don’t wreck the whole thing
Well, I know this has been rehashed a bunch of times already, but I just wanted to point out my own thoughts on Freehand.
I spent nearly 10 years with each application. I worked at a company who used FH exclusively for 3 years. I did package design and can say, without any hesitation that FH was far more useful than Illustrator or Quark. Why? Well, primarily because FH has some excellent page-layout and typographic features in addition to its vector-based tool set. I don’t think Freehand was a better illustration tool, I mean look at the gradient mesh in Illustrator, but I do think that it excelled as a design tool, merging the layout and illustration features in a more or less well thoughtout workflow. I’ve noticed Freehand slip into disarray in recent years and that’s sad. I used to really love it.
For those of you who have beena round a while, you’ll remember that Freehand continues to be juggled around. Originally produced by Altsys, then sold to Aldus, then sold to Adobe, who sold it to Macromedia and now, who just bought it again. I’d hate to see it go for good. Perhaps it will be purchased by some small company who will revitalize it.
As for the other apps from Macromedia, I doubt any MM product which mirrors Adobe’s existing tools will survive the merger. This means Dreamweaver, Fireworks and Freehand will likely get the short end of the deal.
From a design and pre press perpective, Adobe have done a much better job at adapting to the OSX way of life.
Lets just hope Adobe and Apple continue to play nice in the future.
This merger was done because the product lines of both companies are very mature. How many new versions can they bring out of Photoshop or Flash or whatever? What can they add that makes the new version worth buying? Answer: They can´t. Everything in the current or last or previous version of Photoshop is all you need.
New versions of Photoshop, Flash, etc. will now come out every two-3 years, if that. (How long is it between Quark updates?)
To make up for this, the two companies combine, cut costs drastically and make up the profit in lower cost per unit sold. Or go with costly annual subscriptions…..that´s what a monopoly is good for….
Steve Jobs has just sent out the rush order: In 2-3 years, he wants an Apple-developed version of Photoshop, Flash, and Website making software.
Apple killed Adobe´s Premier for the mac. Can and will he do the same for the others?
Seashore.
And uh, what ever happened to PixelNhance?
Well I hope they rewrite Flash to make it a bit more intuitive.
Everyone keep what versions of software you have now, you may be using them for a while if this goes down. Let’s face it some of these applications can’t get much better. Apart from a few additional features how much better can they get. I could do my current job with Photoshop 4.
Flash has become such a bizaare concoction of coding, one needs a degree in it just to write something simple, let alone a more complicated project. It used to be Flash projects could be done by the graphic artist, now one needs to hire a graphic artist plus someone versed in the maze of Flash ActionScript.
Flash is a great program, but….
I see Adobe melding Acrobat pdf files and Flash together.
Photoshop, GoLive, Illustrator – great programs as they are, will I ever need to buy a new version?
In a sense, OS X came along too late. No one has got much choice now but to use the latest versions of everything. I agree that Freehand 5 was as good as it gets. Such a shame it’s gone forever.
BTW does anyone know if it’s possible to turn off anti aliasing if OS X FH? It seems a bit absurd to have to work with fuzzy lines in a line artwork application.
re. bamboozled and Pop-Unders – I updated to 10.3.9 and when visiting another Mac site (that shall remain nameless) got a pop-under – I don’t think this issue has been addressed yet … I hope Apple employees read this as I’m pissed off.
Who gets FrameMaker?