Monday, April 18, 2005

Hit #38

Adobe announced that it is buying Macromedia (MACR) in a tax-free all stock deal valuing Macromedia at around $42/share (based on Friday's close).

I own a small number of Macromedia shares, bought after their last warning. At my average cost of $19.4/share, this takeover represents a 117% premium.

Not exactly a match made in heaven, but Adobe and Macromedia can make it work. While still not universally liked, Flash has made a strong comeback as a browser-based thick-client substitute.

I will be holding onto my Adobe shares that I get in exchange.

In an earlier post, I had mentioned Macromedia as a possible target for Microsoft. Macromedia's leaning towards java technology most likely made it hard for Microsoft to go after it. Or maybe, Microsoft will make a competing bid ?

This acquisition falls in the same class as the recent Symantec/Veritas deal - one that does not immediately make sense. It would have been better for Adobe to go deeper into the document acquisition/retrieval/management area.


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