Adobe to Buy E-Commerce Firm Magento Commerce for $1.68 Billion
May 21 2018 - 8:08PM
Dow Jones News
By Maria Armental
Adobe Systems Inc., the elder software-business statesman behind
photo-editing software Photoshop and PDF reader, is buying
e-commerce firm Magento Commerce for $1.68 billion, adding a key
piece to its platform.
The acquisition -- which would put Adobe head-to-head with the
likes of Salesforce.com -- presents a revenue opportunity of some
$13 billion, Brad Rencher, Adobe's executive vice president of
digital experience, said in a conference call Monday, citing
market-research firm estimates.
Magento, already an Adobe partner, was bought in 2015 from eBay
Inc. as part of a $925 million deal by a group of investors that
included Permira, Sterling Partners, Longview Asset Management and
Innotrac Corp. Permira carved out Magento in November of that
year.
In 2017, Chinese investment firm Hillhouse Capital invested $250
million in Magento. That investment valued the company at some $700
million at the time, according to a previous Dow Jones report.
Hillhouse Capital is selling its stake as part of the deal with
Adobe, Permira said.
Permira stands to return more than five times its initial
investment in Magento of around $200 million, according to a person
familiar with the deal.
Magento, whose clients include Canon and Rosetta Stone along
with overlapping Adobe customers Coca-Cola Co. and Nestlé SA,
handles more than $150 billion in gross merchandise volume,
according to Permira. That compares with eBay's $88.4 billion in
2017 and Amazon.com Inc.'s $313.4 billion, according to FactSet
data.
Under the terms of the deal, which is expected to close in the
third quarter, Magento Chief Executive Mark Lavelle would continue
to lead Magento's roughly 700 workers as part of Adobe's digital
experience business, Adobe said. He would report to Mr.
Rencher.
The acquisition, subject to regulatory approval, is expected to
lower slightly earnings for the year, but it isn't expected to
significantly affect earnings targets, Chief Financial Officer John
Murphy said in the call with analysts.
Separately, Adobe said its board had approved spending up to $8
billion to buy back stock through its fiscal year 2021. The company
said it would rely on cash flow from operations to buy back
stock.
Adobe's shares, which outperform the market with a 36% gain this
year, rose 0.8% to $240 in after-hours trading.
Laura Cooper contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
May 21, 2018 19:53 ET (23:53 GMT)
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