Adobe Buys Omniture For $1.8 Billion

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Adobe Buys Omniture For $1.8 Billion

Audience measurement/analytics has been one of the few areas where companies have been able to hold out for high M&A prices. The latest example: Adobe Systems has struck an agreement to acquire audience analytics company Omniture for $1.8 billion. The terms call for Adobe (NSDQ: ADBE) to pay Omniture (NSDQ: OMTR) $21.50 per share in cash. Regular trading for Omniture was suspended at $17.33 before the market closed pending news; the price jumped 25 percent to $21.80 after hours—above the offer and what was a 24 percent premium. The announcement was made on the same day Adobe said Q2 earnings fell nearly 30 percent, while revenues dropped 21 percent. Adobe shares are down nearly 4 percent after hours, at $34.28. Release | Earnings release.

The promise of better ROI through more sophisticated targeting has fueled the recent acquisitions of audience measurement/analytics firms. Meanwhile, the proliferation of companies in the analytics space has spurred consolidation the last few months. In the case of Adobe, buying Omniture will give its content creation tools much more appeal. This is especially important as Adobe looks to shift its business focus from the desktop to the internet and mobile web. Plus, Omniture comes with a client list that includes just about all the top web publishers.

When the acquisition closes, Omniture’s CEO, Josh James, will join Adobe as SVP of the new business unit, reporting to Adobe’s president and CEO, Shantanu Narayen. The deal is expected to close this fall. The $21.50 per share offer represents a premium of 45 percent over Omniture’s average closing price for the last 30 trading days through yesterday’s close.

Earlier this year, WPP Group invested $25 million in Omniture, and announced that the two had planned to collaborate on a consultancy service. It’s not clear whether that partnership would be severed as a result of this deal, though it appears to be Adobe’s call now.

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David Kaplan

@davidaKaplan Sep 15, 2009 4:19 PM ET

Posted In: Money, M&A & Venture Capital, Mergers & Acquisitions, Research & Metrics

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Tucker Snedeker

Macromedia bought high flying web analytics firm Andromedia a few years back for north of 200m and then shut it down 9 months after purchasing . . . many of the same execs are still at Adobe. Got to wonder what they are thinking with this purchase .

Chirag Patnaik

A cursory look at financials shows that the value per share is $2. Yet Adobe paid 21 or so per share.
Boggles the mind.

Werner Egipsy Souza

It is a big risk!
Companies would much rather choose a free analytics option, at a phase where analytics is flawed.
Once a standard is reached, it may prove to be the free option.

Gene Sartin

At The Transition Companies we have seen that the current economic temperature is favorable for impressive acquisitions. Power players like Adobe now have the upper hand against private equity investors when it comes to obtaining funds needed to back these deals. Our philosophy is that companies need to seize opportunity for growth when it is presented to them. It is far cheaper, far quicker, and far smarter to grow by acquisition than to grow or attempt to grow organically in a sideways market.

From an economics standpoint - as industry giants look to sustain growth in a down economy, we should definitely expect to see continued M&A activity in the coming months.

Cathryn Cranston

At first blush it looks like a big risk for Adobe, I agree. However, this could be a real game changer. Web analytics are as flawed as print is/was. There's absolutely zero fundamental new thinking to date. I will be very interested to see what they do with this.