Adobe recently bought the e-commerce company Magento for a reportedly huge sum of $ 1.68 billion. The aim of Adobe is to capture the e-commerce industry. Currently, the e-commerce industry is dominated by salesforce.com as well as Oracle Corporation.
This is the 3rd largest acquisition by Adobe. Magento is directly related to building software for e-commerce websites. It helps the e-commerce stores to build a proper interface. In addition to that, it also helps them sell the products through social media advertisements and also other avenues. It directly competes with Shopify Inc. The total number of gross merchandise sold through Magento was $ 155 billion in last year. The customers of Magento include marquee names like Canon as well as Rosetta Stone. Magento was earlier part of eBay which sold it in 2015. Since then, Magento is actually backed by Permira Holdings LLP.
Adobe is trying to diversify into the digital media space. As a result, it is trying to acquire companies which are already big in the e-commerce and digital media space. In 2009 as well, it purchased the company Omniture. As a result, it propelled itself in the field of digital advertising. With the help of Magento, it is directly able to step into the e-commerce business.
In addition to that, Adobe also announced that it will be using its cash of up to $ 8 billion to buy back its shares. It will be buying back the shares still 2021. The cash flow will come from the operations. As a result, it will be able to fund the buyback program quite easily. Currently, it has a buyback plan of $ 2.5 billion. This is scheduled to take place in 2019. As a result, this will certainly increase the size of the buyback plan. Permira which was backing Magento earned a five-time return on its investment of $ 200 million.
According to known sources, Magento deal will be closed in the 3rd quarter. It is just a pending the regulatory approvals. Once the regulatory approvals are in place, it will be completed quite quickly. With this step, Adobe will surely be ahead of its rivals in terms of presence in the digital marketing niche. As a result, it will be able to increase its revenues significantly and also use proper syndication to further its current business interests as well. It is a win-win situation for Magento as well as Adobe as both of them will be able to benefit from the deal.
