Adobe acquires Magento for $1.68 billion to get the bigger chunk of e-commerce industry. In order to grab a bigger segment of the digital-commerce industry from Salesforce and Oracle, Adobe is going to buy e-commerce company Magento for $1.68 billion.
Adobe, Photoshop software provider firm is on the way to make its third-biggest acquisition. The purpose behind this decision is to create an end-to-end system for designing digital ads, building e-commerce websites, completing transactions and other online customer experiences, the company said Monday in a statement.
To inform you, Campbell, California-based Magento, provides software to build and run web stores, manage online purchases, shipping and returns. It also helps merchants to sell products via social media ads and competes with Shopify.
In 2015 eBay sold Magento and since then it has been backed by private equity firm Permira Holdings. Its customers include Canon and Rosetta Stone and Magento technology supports more than $155 billion in gross merchandise volume.
Adobe has diversified background with the excellent digital media products that made it one of the world’s largest software companies.
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Although the recent deal is somewhat smaller than Adobe’s 2009 purchase of Omniture, but it will add value to the current portfolio of the company.
The acquisition of Magento would see the company battle cloud-based commerce services Salesforce, Oracle and SAP. However, this segment of Adobe’s business named “Experience Cloud”, generates a smaller amount of revenue and grows bit by bit than its creative software offerings like Photoshop.
Moreover, Adobe also declared to have an $8 billion share buyback program during fiscal year 2021. The funds for this program will get from company’s future cash flow and won’t have a material impact on its income this fiscal year.
In a statement Adobe states, the program will expand on the company’s current $2.5 billion repurchase plan scheduled through fiscal year 2019. Moreover, after closing at $238.10 in New York, the shares of the company rose about 1% in extended trading.
Well, currently the deal pending for regulatory approval. It is predictable to complete in the third quarter of Adobe’s fiscal year. Once completed, Adobe will get access to Magento’s mid-market and large corporate segments’ customers. It will also gain a foothold in physical store and online transactions.
Mark Lavelle, Magento CEO said the agreement would boost up his company’s commerce progress and reflected a common vision between the two firms, which were partners before the deal.
