Most people probably recognise Adobe Systems Inc. for its suite of creative software products, including Photoshop, InDesign, Illustrator, and more. While this family of products has definitely formed the bulk of the company’s sales and offerings, Adobe has, in recent years, attempted to diversify into other verticals like digital advertising and cloud-based commerce. The last vertical falls under the Experience Cloud, a suite of digital services that offers analytics and advertising tools. In a bid to build this segment further, Adobe has now announced a definitive agreement to acquire Magento Commerce, a market-leading commerce platform, for $1.68 billion in cash, subject to customary purchase price adjustments.
In a statement about the acquisition, Brad Rencher, Executive Vice President and General Manager, Digital Experience, Adobe, said, “Adobe is the only company with leadership in content creation, marketing, advertising, analytics, and now commerce – enabling real-time experiences across the entire customer journey...Embedding commerce into the Adobe Experience Cloud with Magento enables Adobe to make every moment personal and every experience shoppable.”
Magento was founded in 2008 by Roy Rubin and Yoav Kutner, and calls itself “the leading platform for open commerce innovation”. The company was acquired by eBay in 2011 for an estimated $180 million but then went private again in 2015 with a $200 million funds injection from private equity company Permira Funds. After the Adobe acquisition, which is expected to conclude by Q3 2018 after regulatory approval, Magento CEO Mark Lavelle will continue to lead the Magento team as part of Adobe’s Digital Experience business, reporting to Brad Rencher. In the statement about the acquisition, Mark said, “Adobe and Magento share a vision for the future of digital experiences that brings together Adobe’s strength in content and data with Magento’s open commerce innovation...We’re excited to join Adobe and believe this will be a great opportunity for our customers, partners and developer community.”
This is Adobe’s third-biggest acquisition till date and its biggest in a decade. The two companies share many joint customers who will now be able to benefit from the advantages of Magento’s integration into Adobe Experience Cloud, including enhanced capabilities to build and run web stores handle online purchases, shipping, and returns, and sell products through social media ads. Adobe and Magento joint customers such as Coca-Cola, Warner Music Group, Nestle, and Cathay Pacific will likely see these new benefits soon, and Adobe will definitely benefit from the acquisition of Magento’s other clients, including a wide variety of brands across industries such as consumer packaged goods, retail, wholesale, manufacturing, and the public sector – Canon, Helly Hansen, Paul Smith, and Rosetta Stone, to name a few.
As TechCrunch notes, the Magento acquisition will help Adobe build its own robust ecosystem as it comes into competition with existing cloud commerce behemoths like Salesforce, Oracle, and SAP. Segment leader Salesforce’s various cloud commerce offerings are expected to generate more than $10 billion in revenue in 2018, and Adobe will be eager to get a piece of that pie. However, for now, the company appears content to double down on its existing Experience Cloud offering, using the additional expertise brought by Magento to solidify its current services before expanding further.
In a separate blog post, Brad Rencher wrote, “The addition of Magento further demonstrates our commitment to enhancing our industry-leading platform and solutions and will further strengthen our ability to deliver our vision for the enterprise – to empower customers across the globe to become Experience Businesses.”