Adobe announced yesterday that it has made the acquisition of Magento for the amount of $1.68 billion. The purchase of the company has been done to enable Adobe to set up an e-commerce platform that caters to B2B and B2C and will be an appropriate addition to the company’s Experience Cloud.
It will also bolster Adobe’s resources as its competing with Salesforce, which is offering an integrated marketing, sales and service offerings in the cloud and acquired Demandware in 2016 for $2 billion to cater a similar set of functionality.
Brent Leary, owner of CRM Essentials is keeping an attentive eye on the relationship between CRM and marketing, stating this acquisition will fill a big gap in Adobe’s Experience Cloud.
“Now they have an offering that allows them to close the loop with consumers, who are able to finalize a digital transaction that started online with digital marketing tools Adobe already offered,” Leary explained.
Leary also feels that this deal will bring Microsoft and Adobe, who have already worked together in the past, even closer, fueling rumors that the two major companies may share a better relationship as they are both battling Salesforce.
But maybe even more interesting may be how this may further the relationship Adobe has with Microsoft. As they also are missing an e-commerce piece to their customer engagement platform (as well),
he pointed out.
However, Leary shared concerns over whether the deal was even worth it, as Magento is mostly dependent on SMB businesses, while Adobe caters mostly enterprises. When Salesforce acquired Demandware, or SAP acquired Hybris, the companies targeted similar demographics. However, Leary concedes, that Magento was simply the best option available.
However, Cindy Zhou, VP and principal analyst at Constellation Research affirms that Magento also boasts some quality customers as well.
Magento has become the commerce platform of choice for many big and mid-size companies, including Coca Cola. There is great synergy for Adobe to complete the customer journey. From my perspective, the marketing-to-sale insight potential is what’s exciting,
This is the second time already that Magento has been acquired by a major company. Founded in 2008, it was first acquired by eBay in 2011 for only $180 million. The company then went private 4 years later with a helping hand from Permira Funds, which disbursed $200 million.
Now acquired for $1.7 billion, Permira Funds is making over five times return from this deal. Additionally, Hillhouse Capital Group invested $250 million in Magento and will seemingly earn a nice return just a year after investing.