Adobe Sets Its Sights on E-Commerce

April Davis By April Davis | 22 May 2018

Adobe Systems Inc. has agreed to a $1.68 billion deal to purchase Magento, as it strives to compete with the likes of Salesforce.com and Oracle Corp in the e-commerce sphere.

In a statement released on Monday, the photoshop software provider said the acquisition of Magento would allow Adobe to provide a full end-to-end system for retailers, encompassing website builds and digital ad design, as well as a host of online customer experience and payment processing tools.

“Adobe and Magento share a vision for the future of digital experiences that brings together Adobe’s strength in content and data with Magento’s open commerce innovation,” said Mark Lavelle, CEO, Magento. “We’re excited to join Adobe and believe this will be a great opportunity for our customers, partners and developer community.”

According to Adobe, the acquisition of Magento will allow the business to provide a single platform for both its B2B and B2C customers, opening up a network of 3000,000 developers, and add-on services like payments, shipping and logistics.

“Adobe is the only company with leadership in content creation, marketing, advertising, analytics and now commerce – enabling real-time experiences across the entire customer journey,” said Brad Rencher, executive vice president and general manager, Digital Experience, Adobe.

“Embedding commerce into the Adobe Experience Cloud with Magento enables Adobe to make every moment personal and every experience shoppable.”

Adobe’s purchase price of $1.68 billion is more than 11 times the value of Magento when eBay first spun it off to private equity investors three years ago. Just last year, Magento reportedly had a value of only $700 million when Hillhouse, a Chinese-based equity investor poured $250 million into it.

The company has also announced an $8 billion share buyback program that will run through fiscal21. Adobe is confident this program will be funded solely by future earnings, and won’t impact the company’s profit for fiscal18. This buyback is in addition to its current $2.5 billion repurchase plan that’s expected to run until 2019.

After Adobe announced its most recent acquisition, the businesses share prices rose by one percent to $238.10 in New York after extended trading.

The deal is expected to close by the end of the third quarter in the states, pending regulatory approval. Once finalised, Adobe will have access to Magento’s customer-base, which the company hopes will help it gain a foothold in physical retail stores, as well as retailers’ e-commerce operations.

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