By Senad Karaahmetovic
Adobe (NASDAQ:ADBE) shares are down over 5% in pre-market Friday after Bloomberg News reported yesterday that the US Department of Justice (DoJ) is preparing an antitrust lawsuit aimed at blocking the company's $20 billion acquisition of Figma.
The DoJ expects to file a lawsuit in March. Bloomberg also reports that the two sides met earlier this week. The deal is also under scrutiny in the European Union after several nations asked the bloc's regulator to look into the deal. The UK's Competition and Markets Authority (CMA) is also reviewing the deal.
Adobe spokesperson told Bloomberg that the company remains committed to closing the deal in 2023, and is engaged in "constructive and cooperative discussions with regulators in the US, UK and EU among others." The report also noted a possible extension to March 2024.
Bank of America analysts believe that the potential lawsuit "may not necessarily lead into the deal not closing." However, it would increase the risk of a delay in the approval process.
"If the deal fails to receive the requisite approvals, we believe there is a likelihood that Adobe may consider developing a competing collaborative cloud design offering," the analysts wrote in a client note.
"From a strategic perspective, we see the logic in Adobe building a competitive offering in a market adjacent to the core Creative Cloud franchise given domain expertise and development competence, though again, this would require a multi-year investment cycle," the analysts added.
The analysts reiterated a Neutral rating on ADBE stock, which is, among other reasons, driven by the uncertainty related to the Figma acquisition.