Adobe Systems Incorporated has announced a definitive agreement to acquire Macromedia in an all-stock transaction valued at approximately $3.4 billion. Under the terms of the agreement, which has been approved by both boards of directors, Macromedia stockholders will receive, at a fixed exchange ratio, 0.69 shares of Adobe common stock for every share of Macromedia common stock in a tax-free exchange. Based on Adobe's and Macromedia's closing prices on Friday, April 15, 2005, this represents a price of $41.86 per share of Macromedia common stock. Upon the close of the transaction, Macromedia stockholders will own approximately 18% of the combined company on a pro forma basis.
In the combined company, Bruce Chizen, current CEO of Adobe, will continue as CEO and Shantanu Narayen will remain president and COO. Stephen Elop, president and CEO of Macromedia, will join Adobe as president of worldwide field operations. Murray Demo will remain EVPand CFO. Dr. John Warnock and Dr. Charles Geschke will remain as co-chairmen of the Board of Directors of the combined company and Rob Burgess, chairman of the Macromedia Board of Directors, will join the Adobe Board.
The acquisition, which is expected to close in the fall of 2005, is subject to customary closing conditions, including approval by the stockholders of both companies and regulatory approvals. The transaction will be accounted for under purchase accounting rules. Due to the absence at this time of estimates of the acquisition-related restructuring costs and the allocation of the purchase price between goodwill, in-process R&D, other intangibles and equity-based compensation expenses related to SFAS 123R, Adobe is currently unable to provide GAAP estimates on future earnings.
The two companies are developing integration plans that build on the cultural similarities and the best business and product development practices from each company. The companies will make additional details and information about the acquisition available at www.adobe.com/aboutadobe/invrelations/adobeandmacromedia.html.
Adobe also announced its board of directors has approved a post-acquisition stock repurchase program of $1 billion. The repurchase program is in addition to the Adobe's existing stock repurchase programs and is expected to commence following the completion of the acquisition. The repurchases will be funded from available working capital.