Is an Adobe Acquisition in the Cards for Microsoft?

A blog post by the New York Time's Nick Bilton yesterday stirred up trouble in the tech industry and caused Adobe stock to soar amid speculation that Microsoft could acquire Adobe. Bilton reports that Ballmer and Narayen recently held a lengthy closed-door meeting about teaming up against Apple:

"The meeting, which lasted more than an hour, covered a number of topics, but one of the main thrusts of the discussion was Apple and its control of the mobile phone market and how the two companies could team up in the battle against Apple. A possible acquisition of Adobe by Microsoft were among the options."

Loose-lipped employees and consultants who were involved in the discussions or familiar with the organization spilled the beans on the meeting. They all requested that they not be named because not only were they not authorized to talk about the meeting, they were specifically told not to.

"Those involved in the meeting, from its logistical set up to the discussion that took place, were instructed to stay quiet about the two companies holding council," writes Bilton.

However, that didn't stop anyone, it seems. Among the topics of conversation were Apple and Steve Jobs dislike for Flash, and the possibility of Microsoft acquiring Adobe. One of the NYT sources revealed that Redmond had talked about an Adobe acquisition years ago but the discussion never got past friendly talks as Microsoft was afraid the Department of Justice would block the deal citing antitrust laws. However, NYT reports that the source also noted that, back then, Google and Apple were not the dominating forces they are now.

Though Ballmer and Narayen may have talked about an acquisition, some say such a deal is 'unlikely.' The Financial Post writes that, despite Adobe stock soaring in the wake of the news (it went as high as 17 percent in intraday trading and closed at an 11.5 percent gain), analysts are unconvinced.

"A Microsoft acquisition of Adobe makes little sense and is unlikely in our view," FP cites Walter Pritchard, a financial analyst with Citigroup Global Markets, as saying.

"Adobe’s Acrobat and Creative Suite are top 5 Windows desktop applications (along with Office), making it easy to make the case such an acquisition would be anti-competitive,” he later added.

Further Reading

  • soundping
    Maybe Ballmer wants someone to photoshop hair on his head? ;)
  • Ragnar-Kon
    Gonna second that "No."

    Microsoft is already one of the top software companies, if not THE top software company. As much as I dislike Apple's business practices, I still think the consumers could only be hurt by the merger.

    But if it does happen, should be interesting what they decided to do with the Mac versions of Creative Suite. Creative Suite is definitely in the top 5 most used Mac software, if not the top 3.
  • zoemayne
    Adobe is too big of a name. Adobe has a lot going on for itself. Its is doing very good for itself.
  • jsc
    If it's making money for them, Microsoft will continue to sell it.

    Most of you are undoubtedly too young to remember that when Apple was suing Microsoft over "look and feel" issues in Windows 3.0, Microsoft was still licensing ROM code for the Apple II computers.
  • Nesto1000
    Why are you guys making such a big deal over the "Microsoft buying Adobe" thing?
    The main point is that Adobe and Microsoft want to team up against Apple in the mobile market.
    I'm fairly certain that Microsoft will never buy out Adobe...
  • bison88
    That photo soooo fits Steve Balmers Microsoft situation right now lol. As for Microsoft buying out Adobe? I doubt it, they would have done it when Adobe was cheaper if they were going to.
  • fflam
    an Adobe Microsoft merger/friendship brings some interesting things to the table. like flash getting merged into the .net framework. yes MS has Silverlight but Flash has the name and market penetration MS wants. also Adobe air could fit better in to windows better much like java intended to. not that i like flash much, just interesting prospects.
  • eddieroolz
    I realize both dislike Apple, and both want to band together to fight it.

    But I don't think an acquisition is the best way to take on Apple. It would brush against antitrust laws, and Adobe and Microsoft are too different.

    There's also the issue of Silverlight vs. Flash if Microsoft does indeed acquire Adobe.
  • Gin Fushicho
    Adobe should remain it's own company, but I would like to see the two collaborate on something.
  • dEAne
    That's good possibilities too.