New York — Adobe Systems Inc., developer of globally admired PhotoShop and Acrobat products went shopping on Tuesday said that it has reached a deal to acquire rapidly growing Web analytics firm Omniture Inc. for $1.8 billion, or $21.50 per share in cash, the companies said Tuesday.
The popular software developer, which announced the deal on Tuesday as it reported grim quarterly sales and profit, has been struggling over the past year as the recession hurt technology spending and customers declined to upgrade older versions of its programs. The company said it is purchasing Web analytics firm Omniture for about $1.8 billion in an effort to make itself more competitive in the world of online commerce.
The price San Jose, California-based Adobe is shelling out for the company, which is $21.50 per share, which comes around 45% premium over Omniture’s average closing price for the last 30 trading days, Adobe said.
The acquisition would provide Adobe with a new flow of revenue to balance that decline. Omniture charges customers fees based on monthly website traffic, so sales are less sensitive to economic swings than Adobe.
“There is no way Adobe can grow organically. This is a smart move,” said Global Equities Research analyst Trip Chowdhry.
Adobe, popularly recognized for its multimedia design, Web-development and document-creation software such as Flash, Dreamweaver and Acrobat, said the purchase will help boost the company’s Web analytics and optimization capabilities directly to those products.
For designers, developers and online marketers employing its tools, this new addition will empower them streamline how they create and deliver relevant content and applications, Adobe said. Advertisers, advertising agencies, publishers and online retailers can improve the experience of their end users and get more out of their digital media through the new analytical capability, the company said.
Omniture, which is based in Orem, Utah, assists clients to comprehend how visitors traffic their Web sites and assists online businesses to target advertisements.
Omniture, which began operations in 1996, has about 1,200 employees and took in just under $300 million in the 12 months ending Dec. 31.
Adobe, which is based in San Jose, Calif. said the deal will help it “transform” e-commerce by combining its content creation tools with Omniture’s online measurement and optimization technologies to help “increase the value Adobe delivers to customers.”
“This is a game changer for Adobe and its customers,” said Shantanu Narayen, chief executive of Adobe, in a statement. “We will enable advertisers, media companies and e-tailers to realize the full value of their digital assets.”
“Adobe customers are looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online,” Narayen said in the press release announcing the deal.
The two companies mentioned that the deal is expected to be completed during Adobe’s fourth quarter and is subject to government approvals. Following the finalization of the deal, Omniture will become a new unit within Adobe, the company said. Omniture’s CEO Josh James will join Adobe as senior vice president in charge of that business unit, reporting to Adobe President and CEO Shantanu Narayen.
James said the partnership of the two companies will allow for new strategies to improve “content engagement, advertising effectiveness and the overall user experience.” That, he added, “will drive more advertising dollars online.”
Adobe said the deal should add to earnings in fiscal 2010.
In an interview, Adobe senior vice president Paul Weiskopf said the deal will allow Adobe to merge the “art” of developing and delivering content with the “science” of measuring the impact of that content.
“Today that is a real pain point for customers,” Weiskopf said. “We have the opportunity to integrate what is today a pretty disparate and not tightly integrated set of work-flows.”
This acquisition is the company’s most prominent since its $3-billion-plus buy out of Macromedia, made in April 2005.