Adobe And Macromedia To Give Microsoft A Run For Its Money

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As you have probably heard by now, Adobe is buying Macromedia in $3.4 billion all-stock transaction.

The companies are set to take the industry by storm with the combination of the two software giants’ groundbreaking programs.

Adobe’s CEO, Bruce Chizen believes that this merger is not to be compared with other recent mergers in the software industry.

“Customers are calling for integrated software solutions that enable them to create, manage and deliver a wide range of compelling content and applications — from documents and images to audio and video,” said Bruce Chizen, CEO of Adobe. “By combining our powerful development, authoring and collaboration software — along with the complementary functionality of PDF and Flash — Adobe has the opportunity to bring this vision to life with an industry-defining technology platform.”

With the forces of both companies combined, they are set for some heavy competition with Microsoft.

“What’s taking shape is the ultimate battle for the browser,” said Paul Colton, CEO of Xamlon, a company that provides tools for creating applications that run in Microsoft’s .Net framework. “This [merger] play is about gaining dominance in the browser applications market,” Colton said. “The reach of PDF and Flash already go a long way, and the combination of those two will be very intense.”

A Silicon.com article explains:

“The audience for Adobe and Macromedia’s software consists of so-called creative professionals, such as web designers and graphics artists. But the companies are also seeking to expand their business with corporate technology departments.

Adobe’s ‘life cycle’ business for document management software, which can tie into back-end computing systems at corporations, last year totaled about $100m.”

In the combined company, Chizen will remain CEO and Shantanu Narayen will continue to be president and COO. Stephen Elop, president and CEO of Macromedia, will join Adobe as president of worldwide field operations. Murray Demo will remain executive vice president and chief financial officer. Dr. John Warnock and Dr. Charles Geschke will remain as co-chairmen of the Board of Directors of the combined company and Rob Burgess, chairman of the Macromedia Board of Directors, will join the Adobe Board.

“Both Macromedia and Adobe are passionate about creating and enabling great experiences across a wide range of devices and operating systems,” said Elop. “Our combined teams will be a powerful force for innovation around cutting-edge platforms for delivering content and applications.”

The two companies are developing integration plans that build on the cultural similarities and the best business and product development practices from each company.

“While we anticipate the integration team will identify opportunities for cost savings by the time the acquisition closes, the primary motivation for the two companies’ joining is to continue to expand and grow our business into new markets,” said Chizen.

Adobe stock has fell 9.7% while Macromedia has gained 9.8%.

According to a Bloomberg article, “Macromedia stockholders will receive 0.69 Adobe share for each of their shares, San Jose, Calif.-based Adobe said in a statement Monday. That values San Francisco-based Macromedia at $41.86, a 25 percent premium to its closing price Friday.”

The deal is expected to close in Fall 2005.

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Adobe And Macromedia To Give Microsoft A Run For Its Money
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