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Adobe to Buy Macromedia

Deal worth $3.4 billion By Charlie White

(4/18/05) In a surprise announcement, Adobe Systems Inc. announced this morning that it would acquire Macromedia Inc. in an all-stock transaction that was valued at approximately $3.4 billion. Adobe, which made no mention of the impending buyout deal at a press event just hours before at the NAB 2005 convention in Las Vegas, said the deal is expected to be complete by this fall.

Also noticeably absent from Adobe’s press event on Sunday night at a glitzy nightclub in Las Vegas were any announcements of new products or improvements to those already existing. Adobe, developer of the world standard Photoshop image editing application along with highly popular digital video editing software Premiere Pro and compositing software After Effects, took a poker-faced stance in Las Vegas, not mentioning the momentous deal brewing just beneath the surface.

In a press statement, chief executive of Adobe Bruce Chizen said, “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. 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” 

Macromedia, widely known for its Web publishing software Dreamweaver and its Flash protocol for Web animation and video delivery, is based in San Francisco on the other side of the Silicon Valley from Adobe, whose home offices are in San Jose, California. The combination of the two companies brings together two of the most ubiquitous protocols for Web publishing, Adobe’s PDF portable document format and Macromedia’s Flash. Adobe’s Chizen said, “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,” Mr. Chizen said.

The deal depends on the approval of the stockholders of both companies, and also awaits approval of federal regulators. The possibility of layoffs was not mentioned by either company. Adobe now employees 3700 people in its offices worldwide and reported revenues of $1.295 billion for fiscal 2003.

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Related Keywords:Adobe Systems Inc., Macromedia, press event, NAB 2005

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