(Bloomberg)—Adobe Systems Inc. on Monday agreed to buy e-commerce company Magento for $1.68 billion in a bid to capture a bigger slice of the e-commerce industry from Salesforce.com Inc. and Oracle Corp. Magento is the e-commerce platform provider for 167 retailers in the Internet Retailer 2018 Top 1000.
“At the core of every great experience are content and data, which enable the consistent, personal, intuitive experiences consumers have come to expect,” writes Brad Rencher, Adobe’s executive vice president and general manager, in a blog post explaining the move. “Like content and data, commerce has become integral to the customer experience. Consumers and businesses now expect every interaction to be shoppable—whether on the web, mobile, social, in-product or in-store. This is the future of commerce—experience-driven commerce.”
The deal, which will be Adobe’s third-biggest acquisition to date, is aimed at helping the company create an end-to-end system for designing digital ads, building e-commerce websites and other online customer experiences and completing transactions, the company said Monday in a statement.
Campbell, California-based Magento offers software to build and run web stores, handle online purchases, shipping and returns. It also helps merchants sell products through social media ads and competes with Shopify Inc. Magento technology supports more than $155 billion in gross merchandise volume, and customers include Canon Inc. and Rosetta Stone Inc. EBay Inc. sold Magento in 2015, and it has been backed by private equity firm Permira Holdings LLP since then.
Adobe has sought to diversify from the digital media products that made it one of the world’s largest software companies. The deal is slightly smaller than Adobe’s 2009 purchase of Omniture, which made the company a player in digital advertising. The Magento purchase would see the company battle cloud-based commerce services Salesforce, Oracle and SAP SE. This part of Adobe’s business, known as its Experience Cloud, generates less revenue and grows more slowly than its creative software offerings like Photoshop.
Adobe also announced an $8 billion share buyback program through fiscal year 2021. The program is expected to be funded from its future cash flow from operations and won’t have a material impact on the company’s earnings this fiscal year. It expands on the company’s current $2.5 billion repurchase plan scheduled through fiscal year 2019, Adobe said in a statement.
The deal for Magento is expected to close in the third quarter of Adobe’s fiscal year, pending regulatory approval. Adobe will gain access to Magento’s mid-market and large corporate customers and gain a foothold in physical store and online transactions.
Magento CEO Mark Lavelle said the sale would accelerate his company’s commerce progress and reflected a shared vision between the two firms, which were partners before the transaction.