Adobe Systems said Tuesday that it will acquire Omniture, which offers Web analytics, measurement and optimization technologies, in a cash deal that's valued at about $1.8 billion, or $21.50 per share of Omniture. That adds up to a premium of about 45 percent over Omniture's average closing price over the last month.
The aim: Create an "end to end platform to transform digital media and advertising," said Shantanu Narayen, CEO of Adobe, on a conference call. The company said the Omniture purchase was made to diversify Adobe's revenue stream going forward. Adobe added that it expects Omniture to boost long-term revenue growth with existing products and new jointly developed services. There will be little cost synergies.
"Adobe plus Omniture will close the loop" from content creation and returns, said Narayen. Adobe said it would offer more details about the Omniture plans at its analyst meeting Oct. 7.The deal (statement) puts Adobe in an interesting position for growth. It basically means that the Adobe software tools that are used by content creators - software tools such as Photoshop, Illustrator, Flash, Acrobat and Dreamweaver - will soon find themselves embedded with additional tools to enhance that content, specifically the monetization of that content by measuring its reach and effectiveness, among other things. In a statement, the company explained it this way:
For designers, developers and online marketers, an integrated workflow — with optimization capabilities embedded in the creation tools — will streamline the creation and delivery of relevant content and applications. This optimization will enable advertisers, advertising agencies, publishers and e-tailers to achieve greater ROI from their digital media investments and improve their end users’ experiences.
Here's Adobe's game plan in a graphic:
Narayen called the deal a "game-changer" for both Adobe and its customers because it enables advertisers, media companies and e-tailers to "realize the full value of their digital assets.”
Adobe said Omniture will become a new business unit within Adobe and that CEO Josh James will join Adobe as senior vice president of the new business unit and report to Narayen. The deal, which is subject to regulatory approval, is expected to close before the end of this quarter.
The announcement came moments after Adobe released its financial results for the third quarter. (Statement) For the quarter, the company reported income of $237.1 million, or 35 cents per share, down from a year ago but flat from the second quarter. Revenue for the quarter was $697.5 million, down from the $887.3 million reported for the year ago quarter, as well as the $704.7 million reported in Q2. Analysts had been expecting 34 cents per share on sales of $686.2 million. In a statement, Narayen said:
We are pleased with the solid revenue and earnings results we were able to deliver in Q3. Our focus remains on driving growth in our core businesses, as well as investing in promising new opportunities.
Shares of Adobe were up slightly in regular trading, closing at $35.62. but were slipping in after-hours trading, down more than 4 percent.