Anyone hear/see any announcements today that say Adobe Systems, Inc. purchased Macromedia (makers of Dreamweaver / Flash s/w)?

Lemme know herein, thanks,

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Yeah, I read about that. I wonder how the competing products will pan out. Will they merge them? Get rid of them? Keep them seperate? hmmm.

I heard that Adobe is planning on purchasing Adobe next. Watch out.

I'm sure they'll merge it. When I worked there between 1998 and 2001 they were looking to get into the "flash" file format space; they were after Dreamweaver (looking to compete in that space) since the GoLive product merger (a product from a company based in Germany) and the creation of an SVG Viewer (which didn't seem to go very far).

Yahoo! finally picked up the annoucement (but I heard if from a friend first):


Adobe Buys Macromedia in $3.4B Stock Deal

By MATTHEW FORDAHL, AP Technology Writer

SAN JOSE, Calif. - By acquiring rival software maker Macromedia Inc. in a deal originally valued at $3.4 billion, Adobe Systems Inc. is positioning itself to do battle with Microsoft Corp. over the tools to create, distribute and manage content online.

The deal, announced Monday, would put Adobe's ubiquitous Acrobat document-sharing program under the same roof as Macromedia's Flash software for creating and viewing interactive content on Web sites independent of operating systems or devices.

Adobe, which also makes the Photoshop image-editing line and a host of other programs for creative professionals and consumers, also gets the Web site-building application Dreamweaver as well as software for enabling real-time collaboration among business users.

Shares of San Francisco-based Macromedia closed at $36.72, gaining $3.27, or nearly 9.8 percent, Monday on the Nasdaq Stock Market. San Jose-based Adobe's shares lost $5.89, or 9.7 percent, to close at $54.77

Under the deal, which both companies' boards approved, Macromedia stockholders get 0.69 shares of Adobe common stock for every share of Macromedia common stock. Based on Monday's closing price, the deal would be worth $3.07 billion.

The $3.4 billion value was based on Adobe's Friday closing price, which represented a 25 percent premium. Macromedia stockholders are to own about 18 percent of the combined company when the deal closes.

Executives of both companies pointed to new market opportunities and downplayed the cost savings. The acquisition, Adobe said, would at most be "slightly accretive" to its earnings in the first year after closing, which is expected this fall.

"This is all about growth," Adobe CEO Bruce Chizen said. "We're doing this because we believe the combined offerings will be even more compelling to our customers given the challenges they're going to face in trying to communicate information in this very complex environment."

As digital content increasingly finds its way onto cell phones, handheld computers and even televisions, the makers of the tools for working with information are racing to make deals so their technology is not left out as new standards emerge.

Macromedia has had success in persuading makers of cell phones and other non-PC devices to embed its Flash technology in their devices, Chizen said in an interview. Since the start of the year, Macromedia has inked deals with Nokia and Samsung Electronics.

Adobe has had less success in this regard, said Chizen.

"Clearly, Macromedia has done a great job both in understanding and gaining value from the non-PC market," he said. That, he added, "is what is very attractive to us."

Besides boosting revenues from software sales and licensing, the combined companies will profit as more developers buy the specialized tools required to create content. They'll also have a greater say in creating standards for new mobile devices.

But Microsoft also has ambitions beyond the PC market it currently dominates with its Windows operating system, Web browser and other content-playing technology. It currently offers a simplified version of Windows for both cell phones and handhelds — as well as "light" versions of its Web browser and media player.

In addition, the world's largest software maker is expected to include technology in its next-generation Windows that could threaten Adobe's dominance with its Acrobat software and the portable document format it invented. Microsoft also has been launching programs to help improve collaboration within the workplace.

With Macromedia's Breeze real-time collaboration software, Adobe will be able to offer more of an all-encompassing suite of offerings than it had before the merger.


"At its simplest level, Adobe wants to get into a new content type," said Connie Moore, an analyst at Forrester Research. "At a more strategic level, this puts Adobe in a very different place in terms of competing against Microsoft or Oracle or IBM."

Still, Adobe's move is most likely a pre-emptive move against Microsoft, said Steven Ashley, an analyst at Robert W. Baird & Co. "It makes it harder for Microsoft to challenge Adobe," he said. "As it stands today, they don't compete very much against one another."

The transaction, contingent upon the approval of regulators as well as the shareholders of both companies, is expected to be completed by the fall. The combined company will keep Adobe's name and San Jose headquarters.

Adobe and Macromedia, until recently, were bitter rivals, squabbling over the look of the interfaces used in their software and financial analysts and customers had speculated about a merger for years.

Chizen will remain as chief executive of the combined company and Adobe's Shantanu Narayen will continue as president and chief operating officer. Macromedia's chief executive, Stephen Elop, will join Adobe as president of worldwide field operations. And Rob Burgess, Macromedia's chairman and former CEO, will take a seat on Adobe's board.

The companies did say there would be cost savings out of the deal but did not mention layoffs specifically.

Adobe employs 3,700 people in offices around the world. It reported revenues of $1.67 billion for fiscal 2004. Macromedia reported sales of $370 million in fiscal 2004.

On Monday, both companies also updated their financial guidance.

Adobe said it expects sales and profits to be at the upper end of the range of its previous estimates. Macromedia said it expects to exceed its previous forecast.

"It's a lot easier to combine two companies that are healthy and doing really well with lots of growth than it is to try to acquire and integrate a company that is broken," Chizen said. "That is the piece that gave us comfort in taking the next step."



Bruce is a great guy, I hope it all works out - mergers are always tough on employees, Really tough. I hope they are "smart" about it.

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