Adobe, known for its Photoshop and Illustrator creative programmes, has announced to buy Magento Commerce for $1.68bn on Monday. By acquiring Magento, Adobe will go to B2B2C and beyond. US $1.68bn will change hands to make this dream a reality and it looks like a decent price given that there are more than 300,000 Magento developers who will now surely have an introduction to Adobe and its suite of services. Both companies think that this is a good idea, they are making all the usual noises about positive synergies. Furthermore, it will fold the gobbled business’s platform into its Experience Cloud in order to add commerce and content management facilities.
Brad Rencher, an executive vice-president with Adobe, said that “Embedding commerce into the Adobe Experience Cloud with Magento enables Adobe to make every moment personal and every experience shoppable”.
In the search for new areas of growth, Adobe is quickly expanding into other businesses these days. This is the reason it has purchased Magento that adds to Adobe’s suite of offerings for the web.
Magento, a big giant in the e-commerce business, was founded in 2007. It came as an open-source web platform for content management and e-commerce that simplifies matters considerably for small business and attracted a large group of users too. Magento was first acquired by eBay in 2011 for an undisclosed amount. After a few months, eBay got split with digital payment processing company i.e. PayPal in 2015. Due to which, eBay solid its enterprise software unit including Magento to investors Permira Funds and Sterling Partners for $925 million. In fact, Magento raised $250 million from Chinese investment firm “Hillhouse” at the valuation of $700 million in the last year.
Brent Leary, the owner of CRM Essentials, said that this deal will fill a hole in Adobe’s Experience Cloud. He added that this purchase is bringing Microsoft and Adobe, who have already announced partnerships in the past, closer together. The relationship of both companies would be more strong as both are battling Salesforce.
Salesforce company is current on a run rate to exceed $10 billion in 2018. In fact, it has set a long-term goal to reach $60 billion in annual revenue by 2034.
Leary also said that this is not necessarily the perfect deal because so far Magento has focused on small and medium business customers, while Adobe’s target audience is clearly the company. If you look at the other players in the space that have already launched the e-commerce platform, Salesforce got Demandware and SAP got Hybris, which were more geared towards the demographic goal of the company, but he believes that it was simply a case of the best option available.
As per the sources, Magento CEO Mark Lavelle will continue to lead the Magento team as part of Adobe’s Digital Experience business which includes its marketing analytics and software for managing the online advertising but will have Adobe executive vice-president and general manager Brad Rencher as his boss.
Lavelle said in a statement that Adobe and Magento, both will share a vision for the future of digital experiences which brings together Adobe’s strength in content and data with Magento’s open commerce innovation. They are excited to shake hand with Adobe and also believe that this would be a great opportunity for their customers, developer community, and partners.
-> Both Magento and Adobe share similar customers like Coca-Cola, Warner Music Group, and Nestlé. Through this deal, Adobe can now better cross-sell its various tools and services. Having similar customers is a great advantage to this.
-> The deal is a good example of Adobe’s increased investment in marketing analytics which is competing with businesses like Salesforce (CRM, -0.46%) and Oracle (orcl, +1.84%).
-> Adobe stocks remained relatively stable in operations on Monday at $240. However, the shares of Magento, the rival of Shopify, fell 2.3% in non-working hours to $ 141.25 due to fears of a higher competition.
-> The deal is expected to get close in the third quarter of 2018. Moreover, Adobe has also announced that it had authorized a new $8bn share buyback programme too on the same day.
Read Also: Why is Magento Ideal for E-Commerce?
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