QuarkVSInDesign.com Archive

The Following is Archived and Preserved from QuarkVSInDesign.com, 2003–2009.

Adobe-Macromedia Deal to Seal on Saturday

Tomorrow, smoothest software company acquisition in recent memory to close.

Following Friday’s con­fir­ma­tion of reg­u­la­to­ry ap­proval in all nec­es­sary ju­ris­dic­tions, Adobe Systems, Inc. (Nasdaq: ADBE) will com­plete the more than $3 bil­lion ac­qui­si­tion of Macromedia, Inc. (Nasdaq: MACR) on Saturday, 3 December 2005.

Shares of both firms soared to year­ly highs fol­low­ing the news, with Adobe gain­ing $1.09, or 3.2%, to end at $34.97 and Macromedia ris­ing $1.76, or 3.8%, to close at $48.26.

When the ink dries to­mor­row, the all-stock trans­ac­tion will net hold­ers of Macromedia com­mon stock 1.38 shares of Adobe com­mon stock per each share of Macromedia com­mon stock owned. 

Despite sev­er­al com­pet­ing ap­pli­ca­tions and tech­nolo­gies be­tween Adobe and Macromedia and a July in­quiry from the DOJ, the ac­qui­si­tion pro­pos­al sailed through reg­u­la­to­ry ap­proval in the United States, Europe, and all oth­er mar­kets in which the multi-national com­pa­nies have of­fices. Adobe cre­at­ed the vec­tor draw­ing pro­gram Illustrator, while Macromedia owns its on­ly se­ri­ous com­peti­tor, FreeHand, which Adobe owned for all of five min­utes dur­ing the 1994 $525 mil­lion all-stock ac­qui­si­tion of FreeHand’s then-owner, Aldus Corp. Immediately fol­low­ing that ac­qui­si­tion, the U.S. Federal Trade Commission, prompt­ed by a suit from orig­i­nal FreeHand cre­ator Altsys, forced Adobe-Aldus to sell FreeHand back to Altsys, who was im­me­di­ate­ly there­after gob­bled up by Macromedia. This time, how­ev­er, the FTC doesn’t ap­pear to care about the fate of FreeHand.

Although FreeHand is still ac­tive­ly sold by Macromedia, it hasn’t been up­dat­ed in three years. Languid de­vel­op­ment has seen the vet­er­an vec­tor ap­pli­ca­tion falling fur­ther and fur­ther be­hind it’s Adobe ri­val. In fact, FreeHand was con­spic­u­ous­ly miss­ing from this year’s up­date to Macromedia’s pro­duct suite, Studio 8.

While FreeHand of­fers some ad­van­tages over Illustrator in terms of in­te­gra­tion with oth­er Macromedia products–most no­tably the ubiq­ui­tous Flash, with which Adobe has nev­er been able to com­pete de­spite half-hearted at­tempts with Adobe LiveMotion (de­funct af­ter ver­sion 2.0) and en­hance­ments to the star of pro­fes­sion­al ti­tling and video com­posit­ing, Adobe AfterEffects–it’s un­like­ly that the ail­ing FreeHand will sur­vive the year.

As one of on­ly two sur­viv­ing mem­bers of the aged Aldus pro­duct fam­i­ly that in­clud­ed page lay­out pi­o­neer PageMaker (R.I.P 1986-2004), and long de­ceased PhotoStyler, Photoshop’s on­ly ever se­ri­ous com­peti­tor, and Persuasion, a graph­i­cal slideshow pre­sen­ta­tion ap­pli­ca­tion uni­ver­sal­ly re­gard­ed as bet­ter than Microsoft PowerPoint–even, in many cas­es, again­st today’s ver­sion of PowerPoint–when FreeHand does fi­nal­ly kick the buck­et, it will leave Adobe AfterEffects as the on­ly sur­vivor of Aldus’s re­leased pro­duct line. Fans of Paul Brainerd’s Aldus, Corp. will mourn FreeHand’s pass­ing, but re­joice in know­ing that AfterEffects will con­tin­ue, as will Aldus’s great­est achieve­ment, InDesign, which was still in ini­tial pro­duc­tion at the time of the 1994 merg­er.

The path to re­solv­ing the oth­er di­rect com­pe­ti­tion be­tween Adobe and Macromedia is not so clear. Both com­pa­nies make vi­brant, ac­tive Web de­sign ap­pli­ca­tions, GoLive and Dreamweaver, re­spec­tive­ly. GoLive in­te­grates tight­ly in­to the en­tire Adobe line of cre­ative pro­fes­sion­al prod­ucts, in­clud­ing Illustrator, Photoshop, and InDesign, while Dreamweaver works just as close­ly with Macromedia’s Flash, Flex, Contribute, and the ColdFusion data­base sys­tem.

Surprisingly, no ob­jec­tion was raised re­gard­ing anti-competitive prac­tices by con­sol­i­dat­ing un­der one roof both ap­pli­ca­tions, which sail far above the on­ly oth­er con­tender, Microsoft’s much dis­dained FrontPage. Even more sur­pris­ing­ly, re­cent­ly leaked in­for­ma­tion about the next ver­sions of Adobe’s Creative Suite in­di­cates that both GoLive and Dreamweaver will con­tin­ue to thrive as sep­a­rate pro­grams for the near fu­ture, with both hav­ing a place in vari­a­tions of Creative Suite 3.

Whether the in­for­ma­tion, pub­lished ear­lier this week in an on­line sur­vey by AbsolutData Research & Analytics on be­half of an undis­closed client, bears fruit is anyone’s guess. Until the merg­er of­fi­cial­ly clos­es, both Adobe and Macromedia are mum on plans to in­te­grate the com­pa­nies’ prod­ucts and tech­nolo­gies. Although Adobe’s COO, Shantanu Narayen, did com­ment vague­ly in an in­ter­view to­day with Forbes:

The ben­e­fit is when you put things to­geth­er. Look at our four ma­jor cus­tomer seg­ments. For the cre­ative designer/developer cus­tomer, we want to of­fer the best of Dreamweaver, Flash and Photoshop. Creative Suite [a soft­ware de­sign pack­age com­bin­ing var­i­ous re­lat­ed im­age ap­pli­ca­tions] has blown away our ex­pec­ta­tions be­cause the Adobe plat­form is stan­dard­ized and in­te­grat­ed with best-of-breed prod­ucts. We will con­tin­ue to provide more. For ex­am­ple, Web site de­sign­ers can work with Photoshop and then switch over to Dreamweaver to cre­ate the site. We can make this all work seam­less­ly.

For the knowl­edge work­er, we want Acrobat to be one of those es­sen­tial desk­top applications–just like e-mail. People are in­creas­ing­ly re­ly­ing on Acrobat as the desk­top ap­pli­ca­tion for shar­ing in­for­ma­tion. Macromedia’s Breeze [Web video-conferencing soft­ware] al­lows for asyn­chro­nous col­lab­o­ra­tion, which means that work­ers don’t have to be in the same place at the same time. That can fa­cil­i­tate much faster pro­duc­tiv­i­ty.

Finally, there is mo­bil­i­ty: The pos­si­bil­i­ties in­her­ent in al­ter­nate de­vices ex­cite me the most. There are a bil­lion peo­ple in China and India who are nev­er go­ing to con­nect to the Internet us­ing a PC. They’re go­ing to con­nect through a cell phone or an al­ter­nate de­vice. We have the op­por­tu­ni­ty to al­so provide an en­vi­ron­ment for peo­ple to en­gage with that in­for­ma­tion on those de­vices like what Macromedia has done with Flash Lite [for cell phones] and we have done with DoCoMo [by bring­ing Adobe Acrobat to its cell phones]. There are so many op­por­tu­ni­ties.

Read the com­plete Forbes Shantanu Narayen in­ter­view.

Adobe an­nounced its af­fir­ma­tive in­tent to ac­quire San Francisco-based ri­val Macromedia on 18 April, 2005. At just over sev­en months from no­tice of in­tent to full share­hold­er and reg­u­la­to­ry ap­proval, this will go down as one of the smoothest soft­ware com­pa­ny ac­qui­si­tions in re­cent mem­o­ry.

Important up­com­ing dates rel­e­vant to the merg­er:

  • 3 December, 2005: The Adobe-Macromedia merg­er to of­fi­cial­ly close.
  • 15 December, 2005: Adobe to dis­cuss the com­bined company’s fis­cal 2006 out­look as part of its fourth quar­ter and fis­cal 2005 year-end earn­ings con­fer­ence call 2:00PM Pacific Time.
  • 31 January, 2006: Adobe to out­line tech­nol­o­gy strat­e­gy to an­a­lysts and in­vestors in New York.

Adobe, Macromedia, Flash, Illustrator, FreeHand, GoLive, Dreamweaver, Aldus, ADBE, MACR

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