Adobe To Acquire Macromedia

Adobe Macromedia
Combining two of the largest makers of software for creating and delivering digital content, Adobe Systems Inc. said Monday it will acquire Macromedia Inc. in an all-stock transaction valued at approximately $3.4 billion.

Shares of Macromedia, known for its Dreamweaver Web-design program and Flash, which animates and adds interactivity to Web pages, rose more than 8 percent in early trading, while Adobe shares sank 11 percent.

Both companies said the long-rumored acquisition was not to consolidate and cut costs but to help Adobe expand into new markets, particularly in the area of providing content to mobile phones and other handheld devices.

Adobe's software includes the popular Acrobat program for creating and reading documents in the PDF format, as well as the popular Photoshop program for working with digital photographs.

Macromedia, based in San Francisco, recently announced tools for expanding its reach into mobile devices.

"This is not a consolidation play. This is all about growth," said Bruce Chizen, Adobe's chief executive. "We're doing this because we believe the combined offerings will be even more compelling to our customers given the challenges they're going to face in trying to communicate information in this very complex environment."

Neither company would speculate Monday on actual product plans after the deal is closed.

There is some product overlap, including Adobe Illustrator and Macromedia Freehand in graphics design, Adobe GoLive and Dreamweaver for Web page creation, and Photoshop and Macromedia Fireworks for working with photos and other graphics.

Under terms of the deal, approved by the companies' boards of directors, Macromedia stockholders will receive 0.69 shares of Adobe common stock for every share of their Macromedia common stock.