The combination of Adobe and Macromedia will provide customers with a more powerful suite of solutions to create, manage, and deliver compelling content and experience across multiple operating systems, devices, and media.
Under the terms of the agreement, which was approved by both boards of directors, Macromedia shareholders will receive, at a fixed exchange rate, 0.69 shares of Adobe's common stock for each share of Macromedia's common stock in a tax-free exchange. According to the prices of Adobe and Macromedia at the close of Friday, April 15, 2005, this represents a price of US$41.86 per share of Macromedia's common stock. At the close of the transaction, Macromedia shareholders will own approximately 18% of the combined company on a pro forma basis.
In the company that will integrate both companies, Bruce Chizen will continue to be the Chief Executive Officer (CEO), while Shantanu Narayen will continue as President and Chief Operating Officer (COO). Stephen Elop, president and CEO of Macromedia, will join Adobe as president of global field operations. For his part, Murria Demo will continue as executive vice president and chief financial officer (CFO). Dr. John Warnock and Dr. Charles Geschke will continue as co-chairs of the Combined Company's Board of Directors and Rob Burgess, Chairman of macromedia's Board of Directors, will join Adobe's Board.
Integration
The two companies are developing integration plans that are based on each company's cultural similarities and business and product development best practices.
The acquisition, which is expected to close in the fall of 2005, is subject to customary closing conditions, including shareholder approval of both companies and regulatory approvals. The transaction will be constituted under the purchasing accounting rules.
Due to the absence at this time of estimates of restructuring costs related to the acquisition and the allocation of the purchase price among goodwill, research and development, other intangibles and common stock-based compensation expenses related to SFAS 123R, Adobe is currently unable to provide GAAP estimates of future revenue.
The transaction is expected to be split equally to slightly affect earnings in the first twelve months after closing on a non-GAAP basis. The company's objective of splitting equally to slightly affect earnings on a non-GAAP basis assumes no adverse impact of the loss of deferred revenue in the first twelve months following closing due to the accounting of the purchase.
Share Repurchase Program
Adobe also announced that its Board of Directors approved a $1 billion post-acquisition share repurchase program. The buyback program is an addition to Adobe's current stock buyback programs and is expected to begin after the acquisition is complete. The buybacks will be financed with the available working capital.
