Adobe Systems, which specializes in digital media and marketing programs for a wide variety of businesses and consumers, is making the deal to give Adobe a full suite of e-commerce and marketing services, says CEO Shantanu Narayen.

One of the biggest developers of business-to-business e-commerce services has a new owner.

Adobe  Systems Inc. will spend $1.68 billion in cash to acquire Magento Commerce in a deal expected to close sometime in the third quarter.

Adobe, which specializes in digital media and marketing programs for a wide variety of businesses and consumers, is making the deal to give Adobe a fuller suite of e-commerce and marketing services, says Adobe CEO Shantanu Narayen.

As we looked at our current portfolio of Adobe analytics, advertising and marketing cloud offerings, we saw an opportunity to add a next-generation commerce capability.

“The addition of the Magento Commerce Cloud will enable commerce to be seamlessly integrated into Adobe Experience Cloud, delivering a single platform that serves both B2B and B2C customers globally,” Narayen told analysts on a conference call announcing the deal. “The Magento Platform brings together digital commerce, order management and predictive intelligence into a unified commerce platform enabling shopping experiences across a wide array of industries.”

Industry analysts say Magento will open Adobe, which caters to large enterprise organizations, to mid-sized companies. The acquisition will produce “a viable large-scale vendor in the mid-market B2B space,” says Andy Hoar, CEO of e-commerce consulting firm Paradigm B2B and the co-producer with Vertical Web Media of B2B Next conference and exhibition. He adds, however, that Adobe faces the challenges of helping Magento transition to cloud-based software and making it more appealing to larger companies.

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The Magento platform, which includes a recently launched expansion of B2B features, is supported by a community of more than 300,000 developers and includes services such as pre-built extensions, including for payment, shipping, tax and logistics.

Magento customers include Canon, Helly Hansen, Paul Smith, Curt Group, Gabor Shoes and Rosetta Stone. Adobe and Magento share joint customers including Coca-Cola, Warner Music Group, Nestlé and Cathay Pacific, Adobe says.

“As we looked at our current portfolio of Adobe analytics, advertising and marketing cloud offerings, we saw an opportunity to add a next-generation commerce capability to Adobe Experience Cloud,” says Brad Rencher, executive vice president and general manager of Adobe’s digital experience business. “One that could serve both B2B and B2C customers, across physical and digital goods, and provide the flexibility to scale to serve mid-market and large enterprise customers.”

When a deal is finalized, Magento CEO Mark Lavelle will continue to lead Magento as part of Adobe’s digital experience business, reporting to Rencher.

Until the transaction closes, each company will continue to operate independently, Adobe says.

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“We believe the addition of Magento expands our available market opportunity, builds out our product portfolio, addresses a key underserved customer need, and brings a great team of people to Adobe,” says Adobe chief financial officer John Murphy. “We intend to fund the acquisition price of $1.68 billion through our current cash position. Magento is private and while their financials are not regularly disclosed, they achieved revenue of approximately $150 million in calendar year 2017.”

 

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