Adobe to buy Macromedia for $3.4bn
19 April 2005
US software company Adobe has announced that it has agreed a deal to purchase rival Macromedia for $3.4 billion (£1.8 billion).
Shares in Macromedia rose 10 per cent as Adobe announced that it was buying the software company and planned to integrate its software with its own. However, Adobe saw its own share prices fall by 11 per cent on the news.
Under the terms of the acquisition, Macromedia's shareholders will own 18 per cent of the combined business, which will be run by Adobe's chief executive, Bruce Chizen. The deal will be an all-share transaction in which Macromedia shareholders will get 0.69 of an Adobe share for every share they own.
In a separate announcement, Adobe said it would buy back $1 billion of its shares after the Macromedia deal was completed in the autumn.
Macromedia's products include Dreamweaver and Flash web design software. Macromedia's president and chief executive Stephen Elop will become president of worldwide field operations at the enlarged company.
"Customers are calling for integrated software solutions that enable them to create, manage and deliver a wide range of compelling content and applications - from documents and images to audio and video," said Bruce Chizen, Adobe's chief executive.
Software companies are increasingly looking to consolidate and provide more integrated products for customers. Adobe is facing stiff competition from Microsoft at the moment in the field of office-document creation software.
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