Adobe Systems Inc. could be facing potential legal action from shareholders concerning their recently announced $20 billion acquisition of Figma. The acquisition, which has been described as “transformative,” was finalized on August 27th, marking Adobe’s biggest purchase in its history.
However, there are doubts over the legitimacy of the deal, as some investors have raised concerns about the price that Adobe paid for the software company. They allege that this acquisition was an example of the company overpaying for Figma and that Adobe’s current leadership team was deliberately duped.
The investors behind the potential lawsuit are led by shareholder activist James Zenni and his Z Rock Investment Fund. They are of the opinion that Adobe chief executive Shantanu Narayen did not act with the best interests of all of Adobe’s shareholders, and was instead influenced by his long friendship with Figma’s founder Dylan Field.
The investors believe the $20 billion paid for the technology startup was grossly excessive given the fact that it was only valued at $800 million in January this year. It is their opinion that Adobe’s decision to buy Figma directly-rather than competing with other bidders- is evidence of a conflict of interest, as Dylan Field was a close friend of Narayen.
Adobe stands to benefit greatly from this purchase as Figma’s product is unique, cloud-based design software that stores designs online rather than on a user’s device. This acquisition would make Adobe the unquestioned leader in design software, as it already owns a number of popular design software products including Photoshop and Illustrator.
In a statement responding to the potential legal action, Adobe released the following: “Adobe remains confident that it has acted appropriately in making the decision to acquire Figma. The investigation has revealed that the purchase price was comparable to the prices of other recent acquisitions in the software industry.”
It remains to be seen whether or not the lawsuit goes ahead, however Z Rock Investment Fund is currently in the early phases of filing. If legal action against Adobe is taken, it will have to be determined if the company’s chief executive acted in the company’s best interests or in his own. Although the acquisition of Figma could benefit Adobe greatly in the long run, for now it appears there is significant legal risk for the tech giant.
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