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Adobe acquires e-commerce firm Magento for $1.68 billion

Adobe enters e-commerce industry

In order to compete against e-commerce giants Salesforce and Oracle, Adobe bought Magento for $1.68 billion on Monday. This is Adobe’s third-largest deal ever, and it is an important one in expanding their brand.

Adobe announced on Monday that they hope to grow their e-commerce platform, creating an end-to-end system with online customer support. And Magento will allow it to do just that – it runs web stores, manages purchases, and fulfills shipping orders. Its biggest customers include Jaguar, Rosetta Stone, Coca-Cola, and Burger King.

Additionally, investors seem elated by the news as well. After the announcement of this and a three-year buyback of $8 billion in shares, Adobe’s (ADBE) share price rose one percent.

Competitors, on the other hand, are hurting – Magento’s rival Shopify fell 5.5 percent after news of the acquisition.

Permira Holdings, LLC also took home a win on Monday. In 2015, they purchased Magento from eBay for just $200 million. Permira’s investment netted them five times the amount of their original purchase value.

However, Adobe still has a lot of work to do before it can position Magento over Salesforce and Oracle. Salesforce generated $8 billion in revenue in 2017, whereas Magento had just $150 million.

Thus, while Magento’s catching up to Salesforce is unlikely, it will still succeed for Adobe. Moreover, Forrester vice president Andy Hoar predicts that B2B e-commerce will grow 7.3% for the next two years, and then grow as high as 7.9% once the new decade rolls around. Indeed, by the end of 2021, the industry could easily be worth over a trillion dollars.

Adobe has always been the leader in creative software such as Photoshop, Illustrator, Lightroom, and InDesign, but this acquisition puts the firm into another league. With Magento by its side, growth opportunities for Adobe are endless.


Featured image via Wikimedia Commons

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