Adobe Acquires Magento

In a shocking press release, we all learned that Adobe will be acquiring the well-known eCommerce platform, Magento. For those of us who know Magento well, we can look back at the past growth and changes over these last couple of years and may find ourselves thinking, “This all makes sense now,” but it doesn’t make the news any less surprising.

This move will definitely raise some eyebrows and have us all wondering, “what does this mean?”. Right now, we don’t know and it’s too early to speculate entirely on what this shift will mean for the Magento we know and love.

 

The Purchase

Magento was first sold by Ebay Inc. in 2015 for $925 million to a private equity firm called Permira Holdings LLP. Today, Adobe agreed to buy Magento for a whopping 1.68 billion. This will be the third large software acquisition for Adobe, best known for their Photoshop software. Their goal being to create an end-to-end system for designing digital ads, building e-commerce websites and other online customer experiences and completing transactions. This was Adobe’s statement regarding the reason behind the acquisition. Many see this as a play for Adobe to compete with other cloud-based commerce services like Salesforce, Oracle and SAP SE.

From a business perspective, you could say that the move is a smart one. “In one fell swoop, Magento went from having next to no cash compared to Shopify, to now being part of a company with a $117.26 billion market cap as of today,” said Daniel Augustine, Director of Technology at Gauge.  It’s also not a bad move for Adobe who will gain access to Magento’s vast catalog of mid-market and large corporate customers. Not only that, it will also allow Adobe to gain ground in brick and mortar stores and online. Adobe’s executive vice president Brad Rencher explains the move in more detail in a recent blog post. Even Mark Lavelle shared his thoughts on the recent acquisition in a pretty standard statement on the Magento blog.

 

The Reaction

Immediately following the announcement a few things happened.

Stock for Magento skyrocketed …

Magento Stock Price Spike

And stock for Shopify took a nosedive

Shopify Stock Price Drop

And then we all ran to twitter, LinkedIn, Youtube, and Bloomberg to see what was going on!

 

What’s Next

Like most acquisitions, we aren’t likely to see immediate changes. It will take a couple of years for the companies to get their footing and figure out how all of this will work. Here are a couple of things we know:

  1. Magento 2 will not turn into Adobe 2 … yet. The community isn’t going anywhere. For right now, it will stay just as it is. So we don’t need to panic that all of a sudden everything will turn on its head.
  2. Leadership will stay. One thing that won’t be changing any time soon is that it was announced that upon close, Magento CEO Mark Lavelle will continue to lead the Magento team as part of Adobe’s Digital Experience business. This will provide stability for the days to come as Mark Lavelle has been with Magento since 2015, and before that an integral part of leadership at Ebay.

In the coming weeks after the announcement, we will see the dust settle and get a better picture of what the future will hold. The idea of such big changes is both exciting and a little bit scary. We will all be keeping our eyes and ears open to see what happens next, and with any luck, these changes will only improve the Magento platform. I predict that this acquisition will mean great things for merchants and customers, but only time will tell.