If IPO-hungry investors thought they’d get some relief in the M&A market, the opportunity for a successful exit got a whole lot bleaker in the last few days.
Yesterday Adobe and Figma announced that they had called off the blockbuster $20 billion acquisition the companies had first announced 15 months ago. That deal was set to be Adobe’s largest acquisition ever and one of the largest acquisitions of a subscription software company in history. It was also going to be a much-needed respite for what’s been an exceedingly dry exit environment for investors. Figma’s enormous deal with Adobe has been repeatedly cited as an example of how there is still hope for strong exits for good companies—even in this market.
Well, no longer.
Since the deal was announced last September, it’s received repeated backlash from anticompetitive watchdogs in Europe and the U.K. Just last month, the Competition and Markets Authority of the U.K. published findings from its “detailed Phase 2 investigation,” stating that it had provisionally found that the deal would eliminate competition in the product design, image editing, and illustration software markets. The report stated that 80% of the professional product design market in the U.K. uses Figma’s software.
Then there was The European Commission, which told Adobe last month that it believed the Figma acquisition might reduce competition globally for interactive product design software and of other creative design software.
One month after these reports, Adobe and Figma decided to call it quits, they said yesterday. And that comes with a steep $1 billion breakup fee Adobe will have to pay Figma, per earlier agreements.
“It’s not the outcome we had hoped for, but despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal,” a statement posted by Figma cofounder and CEO Dylan Field reads.
It’s not just the Figma deal in the spotlight this week. On Sunday, the biotech company Illumina agreed to divest cancer test maker Grail, which it acquired for $7.1 billion two years ago. That was after the FTC’s successful court appeal that argued that the deal would be anticompetitive (the European Commission had also challenged the deal).
All of this spells very bad news for private market investors, as it will dissuade some companies from attempting certain M&A deals at all (though M&A agreements are still getting signed. Just check out the lineup in today’s deals section). It goes to show why some VCs are feeling an additional sense of urgency and have started publicly pushing back, such as some firms’ condemnation of the Federal Trade Commission from earlier this month regarding its ongoing effort to block the Microsoft-Activision Blizzard acquisition.
In other news…Nikola founder Trevor Milton yesterday was sentenced to four years in prison, a long-awaited determination after Milton was found guilty of defrauding investors regarding his electric vehicle company in Oct. 2022. “Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false,” the judge said. In court, Milton said “I obviously feel awful for all the resources and time this has caused everybody. I don’t think you can feel human without feeling terrible for everyone involved. My intent was not to harm others.”
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Octopus Energy Group, a London, U.K.-based power supplier, raised $800 million in funding from Origin Energy, Tokyo Gas, and others.
- Tamara, a Saudi Arabia-based deferred payment platform, raised $340 million in Series C funding. SNB Capital and Sanabil Investments led the round and were joined by Shorooq Partners, Pinnacle Capital, and others.
- Strike Graph, a Seattle, Wash.-based security and compliance platform, raised $8.5 million in funding. BAMCAP led the round and was joined by existing investors Madrona, Information Venture Partners, and Rise of the Rest.
PRIVATE EQUITY
- Clearlake Capital Group and Insight Partners agreed to take Alteryx, an Irvine, Calif.-based data analytics platform, private for $4.4 billion.
- Bluestone Equity Partners acquired a minority stake in VideoVerse, a Los Angeles, Calif. and Mumbai, India-based AI-powered video editing platform, for $45 million.
- Arrive Technology acquired AirBox Technologies, a Falls Church, Va.-based provider of package delivery solutions. Financial terms were not disclosed.
- Audax Private Equity acquired a majority stake in Dobbs Tire & Auto, a St. Louis, Mo.-based tire retailer and automotive aftermarket service company. Financial terms were not disclosed.
- Cerberus Capital Management acquired Spring EQ, a Conshohocken, Penn.-based home equity financing solutions provider. Financial terms were not disclosed.
- EQT Private Equity agreed to acquire Zeus, an Orangeburg, S.C.-based provider of tubing for medical devices and industrial applications. Financial terms were not disclosed.
- Redwood Services, backed by Union Main, acquired a majority stake in B&J Plumbing, Heating, and Air Conditioning, a Wilson, N.C.-based provider of plumbing, heating, and AC services. Financial terms were not disclosed.
- Transom Capital Group acquired Galleher, a Los Angeles, Calif.-based distributor and manufacturer of flooring products. Financial terms were not disclosed.
- Verdane acquired minority stakes in Meltwater, a San Francisco-based provider of media, social, and consumer intelligence solutions, and Jobylon, a Stockholm, Sweden-based talent acquisition platform. Financial terms were not disclosed.
- Yellow Wood Partners agreed to acquire Elida Beauty, a London, U.K.-based portfolio of brands including Q-tips, Impulse, Caress, Tigi, Timotei, and others, from Unilever. Financial terms were not disclosed.
- 65 Equity Partners acquired a minority stake in Felix Storch, a Bronx, N.Y.-based manufacturer and distributor of specialty major appliances. Financial terms were not disclosed.
EXITS
- Samyang Specialty Solutions, a subsidiary of Samyang Holdings, acquired Verdant Specialty Solutions, a Houston, Texas-based chemical manufacturer, from OpenGate Capital for $250 million.
OTHER
- Coupang agreed to acquire Farfetch, a London, U.K.-based luxury fashion retailer, for $500 million.
- IBM agreed to acquire StreamSets, a San Francisco-based data operations and data ingestion platform, and webMethods, a Fairfax, Va.-based B2B integration platform, from Software AG, for €2.1 billion ($2.3 billion).
- ServiceNow agreed to acquire UltimateSuite, a Prague, Czech Republic-based task mining company. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
- Argonaut Private Equity, a Tulsa, Okla.-based private equity firm, raised $500 million for its fifth fund focused on diversified industrial businesses.
- Turnspire Capital Partners, a New York City-based private equity firm, raised $275 million for its second fund focused on industrial and consumer businesses.
- Baird Capital, a Chicago, Ill.-based private equity and venture capital firm, raised $218 million for its sixth fund focused on companies in the B2B technology and services markets.
PEOPLE
- Bansk Group, a New York City-based private equity firm, promoted Chris Kelly to senior partner and Ciaran Bermingham & Tim Stone to principal.
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