Adobe to buy Macromedia

Adobe Systems Inc., one of the world’s largest providers of document-design software, will acquire Macromedia Inc., a leader in web design software, in an all-stock transaction valued at approximately $3.4 billion, the companies announced April 18.

Though it was unclear at press time exactly how this union of print and online publishing software giants would affect each company’s respective products, one thing is for sure: The deal is bound to have an impact on teachers and students at all levels of education.

San Jose, Calif.-based Adobe’s software includes the popular Acrobat program for creating and reading documents in the Portable Document Format (PDF), as well as the popular Photoshop program for working with digital photos. San Francisco-based Macromedia makes the Dreamweaver and Flash web-design software, among other products.

Educators who spoke with eSchool News following the announcement expressed both optimism and concern over the merger. While the deal might eventually lead to stronger electronic publishing tools and better prices, they said, it might also lead to headaches in the near term, especially if Adobe plans to phase out any of the offerings in Macromedia’s product line.

“In many ways, this merger … unifies the definition of electronic publishing in today’s world,” said Jim Hirsch, associate superintendent for technology at the Plano Independent School District in Texas. “Where Adobe has excelled in providing tools to create images and convert existing publications for efficient delivery, Macromedia has excelled in providing tools that bring realism to the web experience. Hopefully this merger will allow even closer integration of those two strengths and provide those of us in education with even more powerful [graphic-arts] tools.”

Sandra Becker, director of technology for the Governor Mifflin School District in Pennsylvania, shared in Hirsch’s overall optimism, pointing out that the merger should enable the companies to pool their resources in efforts to provide “best of breed” solutions.

But Becker cautioned that retraining school IT staff to integrate new or repackaged solutions might take time. “Training in these applications is always involved, as the products have steep learning curves,” she explained.

There is some product overlap between the two companies, including Adobe Illustrator and Macromedia Freehand in graphics design, Adobe GoLive and Macromedia Dreamweaver for web page creation, and Adobe Photoshop and Macromedia Fireworks for working with photos and other graphics. If the combined company decides to phase out products that overlap, that could force educators and their students to learn new programs.

Combining the two businesses, the companies said, will allow them to create more powerful software programs that can be used across multiple operating systems, which should pave the way for expansion into new markets.

“This is not a consolidation play. This is all about growth,” said Bruce Chizen, Adobe’s chief executive. “We’re doing this because we believe the combined offerings will be even more compelling to our customers, given the challenges they’re going to face in trying to communicate information in this very complex environment.”

At press time, it also was not known what would become of the many grant and education programs sponsored by the two companies.

A long-time supporter of technology in the classroom, Macromedia currently operates several contests for schools. Among them is Macromedia’s Innovation Award for Students, which rewards students who use Macromedia products to design web content, applications, or presentations for a variety of professional markets, including business, communications, and journalism. That program is slated to conclude in October, according to the company’s web site.

Macromedia also features a wide range of training and tutorial programs for educators. In schools, Macromedia’s products and services are everywhere. Among the most popular products are Contribute 3, a web publishing tool; Breeze, an online presentation, training, and meeting system; Captivate, a tutorial creator for professional development purposes; and Director MX, a program for integrating multimedia presentations into existing classroom lessons.

Adobe, too, is well known for its ties to the school community. Over the years, the company has facilitated several projects highlighting the work of student graphic designers–such as Adobe’s Design Achievement Awards. This annual program provides Adobe software and cash gifts to students who submit multimedia projects in several categories, including photography and digital collaboration.

Calls to both companies regarding the fate of these programs were not returned by press time.

Under terms of the deal, approved by the companies’ boards of directors, Macromedia stockholders will receive 0.69 shares of Adobe common stock for every share of their Macromedia common stock. That will result in Macromedia stockholders owning about 18 percent of the combined company when the deal closes.

The transaction, contingent upon the approval of both companies’ stockholders, is expected to be complete by the fall. It also requires the approval of federal regulators. The combined company will keep Adobe’s name and San Jose headquarters.

The companies, up until about 2001, were bitter rivals, squabbling over the look of the interfaces used in their software. Still, financial analysts and customers have been speculating about a merger for years.

Chizen will remain as chief executive of the combined company, and Adobe’s Shantanu Narayenb will continue as president and chief operating officer. Macromedia CEO Stephen Elop will join Adobe as president of worldwide field operations.

The companies said they are in the midst of developing “integration plans” that will build on their similarities. They made no mention of layoffs and would not speculate about possible changes to their respective product lines.

Adobe employs 3,700 people in offices around the world. It reported revenues of $1.295 billion for fiscal 2003. Macromedia reported sales of $370 million in fiscal 2004.

“While we anticipate the integration team will identify opportunities for cost savings by the time the acquisition closes, the primary motivation for the two companies’ joining is to continue to expand and grow our business into new markets,” Chizen said.

Though optimistic, educators say they aren’t quite sure what to expect.

“It will be interesting,” noted Hirsch, “to speculate what Adobe might decide to name its newest suite of print and web publishing tools now–Creative Suite MX?”

Whatever the company’s decision, Hirsch hopes it comes at a discount to educators–and “hopefully at a lesser education license fee than we pay for the individual products today,” he said.


Adobe Systems Inc.

Macromedia Inc.

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