Adobe Sees Q4 Earnings Above Market; To Buy Figma In $20 Bln Cash, Stock Deal - Update

Adobe Systems Inc. (ADBE), while reporting weak third-quarter earnings on Thursday, issued fourth-quarter earnings outlook above market.

Separately, Adobe announced that it has entered into a definitive merger agreement to acquire Figma, a web-first collaborative design platform, for approximately $20 billion in cash and stock.

In pre-market activity on Nasdaq, Adobe shares were losing around 8.5 percent to trade at $340.

For the fourth quarter, the company projects earnings per share of around $2.44 and adjusted earnings per share of $3.50. Total revenue is expected to be around $4.52 billion.

On average, 23 analysts polled by Thomson Reuters expect earnings of $3.45 per share for the quarter on revenues of $4.58 billion. Analysts' estimates typically exclude special items.

Regarding the acquisition of Figma, Adobe said the purchase price is comprised of approximately half cash and half stock, subject to customary adjustments. Around 6 million additional restricted stock units will be granted to Figma's CEO and employees that will vest over four years subsequent to closing.

The transaction is expected to close in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions, including the approval of Figma's stockholders.

Adobe expects the combined company to reimagine the future of creativity and productivity, accelerate creativity on the web, advance product design and inspire global communities of creators, designers and developers.

Following the deal, Figma's web-based, multi-player capabilities are expected to accelerate the delivery of Adobe's Creative Cloud technologies on the web, making the creative process more productive and accessible to more people.

Adobe expects the cash consideration to be financed through cash on hand and, if necessary, a term loan.

Upon the deal closure, Dylan Field, Figma's co-founder and CEO, will continue to lead the company, reporting to David Wadhwani, president of Adobe's Digital Media business.

Until the transaction closes, each company will continue to operate independently.

In the deal, Allen & Co. LLC is serving as financial advisor to Adobe and Wachtell, Lipton, Rosen & Katz is serving as legal advisor.

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