Potential e-commerce deal of the year? Adobe steps up its game by acquiring Magento

In a statement published on Monday, we learned that Adobe was in final stages of completing the $1.68 billion acquisition of Magento. This is the third-biggest purchase for Adobe. And can be regarded as an attempt to diversify its business in order to stay ahead of the competition.

The acquisition of Magento might be the e-commerce deal of the year because it sent ripples down the stock market. Namely, it caused a fluctuation of Shopify’s shares, Magento’s biggest competitor. When the news was announced on Monday the shares plummeted by more than 5%, but were projected to drop around 1.8% the next day.

Why is Magento so important?

Magento is a west-coast company which specializes in e-commerce software. The services they provide go beyond the design and management of online stores. Magento also deals with purchases, and helps its customers handle shipments and returns.

In 2017 Magento received a recognition as the leading e-commerce platform. The shopping experience they offer represents a bridge between digital and brick-and-mortar stores. All of this is neatly packed as a cloud based solution. Magento allows integration across multiple retail channels, and has a network of more than 1150 partners.

The volume of merchandise their technology caters to is estimated at more than $155 billion. The customers of Magento are Rosetta Stone Inc. and Canon Inc., to name but a few. After being sold in 2015 the company has been backed by Premira Holdings LLC, which is one of the leading private investment firms in the sector.

What is the takeaway for Adobe?

This promising e-commerce deal of the year should allow Adobe to create a more integrated online system. For almost ten years, Adobe made purchases outside the creative software industry. Similar was the acquisition of Omniture, an online marketing and analytics company, in 2009.

But, you may be wondering what is the reason for this shopping spree. Besides the obvious move away from the digital media software, they’ve been so good at, these business deals could ensure an online war for a piece of the cloud-based retail business. Other players in the field include SAP SE, Salesforce, and Oracle.

Adobe already has a cloud-based software called Experience Cloud. And with the integration of Magento the company should be able to provide an all-encompassing solution to its clients. Even though the profits coming from this segment are smaller compared to the creative software, we may assume it would grow more rapidly in the future.

What’s more, this deal could signal a stronger partnership between Microsoft and Adobe. Microsoft, as of this writing, lacks an e-commerce service on their platform and both companies have a common enemy which is Salesforce. It is yet to be seen whether this acquisition will work out since Adobe and Magento have been targeting different customers.

Final signals

Whether this purchase is an e-commerce deal of the year is still debatable. But, no matter how things play out in the future, it would be interesting to see if our online retail experience would change in any way.