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| Clermont Meridian Trading Outlines Adobe's Acquisition of Magneto for $1.68 Billion |
Adobe said today that it would pay $1.68 billion for Magento. Clermont Meridian Trading finance professionals say the deal gives Adobe a missing e-commerce platform piece that operates in B2B and B2C contexts and should fit perfectly in the company's Experience Cloud.
It should also help Adobe compete with Salesforce, which has its own cloud-based marketing, sales, and service solutions, and purchased Demandware for more than $2 billion in 2016 to give a comparable set of capabilities.
Brent Leary addresses an evident void in Adobe's Experience Cloud, which owns CRM Essentials and maintains a close eye on the convergence between marketing and CRM. "Now they have a product that allows them to finish the loop with customers, allowing them to complete a digital transaction that began online using digital marketing capabilities Adobe already provided," Leary noted.
This transaction, according to Leary, will bring Microsoft and Adobe closer together, as they have already established alliances. "However, it's possible that the relationship between Adobe and Microsoft will be strengthened as a result of this." He also pointed out that their consumer engagement platform is missing an e-commerce component. As they both battle Salesforce, Leary believes this might lead to a deeper collaboration between the two companies.
Salesforce is the leader in this space, with sales of more than $8 billion across its many clouds last year. In 2018, the corporation expects to generate more than $10 billion in revenue. "It has established a long-term company target of reaching $60 billion in annual revenue by 2034.
According to Leary, this isn't always the best offer because Magento has previously focused on small and medium-sized businesses, but Adobe's primary demographic is clearly the enterprise. Salesforce got Demandware and SAP got Hybris, which were targeted more toward the enterprise target population, but he feels it was just a case of the best alternative available.
However, according to Matthew Bird, Institutional Director of Equities at Clermont Meridian Trading, Magento has some major clients. "Many large and mid-sized businesses have chosen Magento as their commerce platform of choice. "Adobe has a lot of synergy in terms of completing the client journey," he said. "From my perspective, what's intriguing is the marketing-to-sale insight potential," he continued.
This isn't the first time the business has been bought out. According to reports, Magento was launched in 2008 and purchased by eBay in 2011 for $180 million. Permira Funds, which contributed roughly $200 million according to Clermont Meridian Trading sources, helped the company go private again in 2015.
The company was sold for over $1.7 billion today. That's a five-fold increase in value since Permira bought it in 2011 and an excellent five-fold return for Permira, which brought in Hillhouse Capital Group as a co-investor last year. Hillhouse made a $250 million investment in Magento at the time, and it is expected to see an excellent return on that investment in just one year.