Adobe Systems plans to pay $1.8 billion for fast-growing business software maker Omniture as the maker of Photoshop and Acrobat looks to turn around declining sales.
Adobe, which announced the deal yesterday as it reported lower quarterly sales and profit, has been struggling over the past year as the recession hurt technology spending and customers declined to upgrade older versions of its programs.
The acquisition would give Adobe a new stream of revenue to offset that decline. Omniture charges customers fees based on monthly website traffic, so sales are less sensitive to economic swings than Adobe.
Advertising agencies and companies use Omniture's software to analyse how consumers use websites. It is the biggest provider of such services, competing with Google and other smaller players. The vast majority of all professional websites are built with Adobe's Creative Suite line of design software.
Janney Montgomery Scott analyst Sasa Zorovic said Adobe's customers will not necessarily choose to subscribe to Omniture's services simply because its technology is embedded into Creative Suite.
"It will require some selling, but I think the opportunity is there," he said.
Adobe, whose software competes with products from Microsoft and Apple, agreed to pay $21.50 per share in cash for Omniture, a 24 per cent premium over Omniture's closing price yesterday.
Omniture shares soared 25 per cent to $21.74 in after-hours trading, while Adobe shares slid 4.5 per cent to $34.06.
The deal would be Adobe's second-largest acquisition after its $3.4 billion purchase of Macromedia in December 2005.
Omniture would become a unit of Adobe, headed by its current chief executive, Josh James. Adobe said the deal should close in the fourth quarter of fiscal 2009 and would add to Adobe's per-share earnings in fiscal 2010.
Adobe said it would be paid a fee of $64 million by Omniture if the deal is terminated, according to a regulatory filing.
Adobe also reported yesterday that fiscal third-quarter earnings, excluding items, fell to 35 cents per share from 50 cents per share a year ago. That beat Wall Street's average forecast by a penny, according to Thomson Reuters I/B/E/S.
Second-quarter sales fell 21 per cent to $697.5 million, but beat analysts' average forecast of $686.2 million. For the fiscal fourth quarter, not counting any effect of the Omniture deal, Adobe forecast revenue and earnings, excluding items broadly in line with analysts' estimates.
Reuters