Adobe Snaps Up Omniture

Graphic design and display software giant Adobe Systems Incorporated is to acquire web analytics and online business optimization firm Omniture, Inc. for around $1.8 billion.

San Jose, CA-based Adobe, best known for Flash, Acrobat and Photoshop software, will offer $21.50 per share in cash for Omniture stock. This represents a premium of 45% over Omniture's average closing price for the last 30 trading days, and a premium of 24% on its closing stock price on Tuesday.

Omniture has been working closely with marketing services giant WPP this year, partnering with insight division Kantar in May. WPP bought $25m of Omniture stock in January: the impact of today's news on that relationship is not yet clear.

Omniture will become a new business unit within Adobe and Omniture CEO, Josh James, will join Adobe as Senior Vice President of the new business unit, reporting to Adobe's president and CEO, Shantanu Narayen.

The deal is subject to government approvals and other conditions, and is expected to close in the fourth quarter of Adobe's 2009 fiscal year.

Adobe says the buy will 'further its mission to revolutionize the way the world engages with ideas and information' by combining its content creation tools and ubiquitous clients with Omniture's Web analytics, measurement and optimization technologies. It plans to embed optimization capabilities in its creation tools and thereby offer advertisers, advertising agencies, publishers and e-tailers greater ROI from digital media investments and improved end user experiences.

Narayen says the move is 'a game changer for both Adobe and our customers', with the latter 'looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online.' Adobe will also gain a scalable SaaS platform that captures over a trillion transactions per quarter; an expansive partner ecosystem; and a recurring revenue model. In a conference call, Narayen said the inability to monetize media on the Web was a 'pain point' reported by his firm's customers in advertising, media and entertainment.

James says the sale will accelerate Omniture's ability to deliver on its vision of 'enabling customers to optimize every digital interaction', and will 'bring new innovation to the market that improves content engagement, advertising effectiveness and the overall user experience.'

James told www.deseretnews.com that he expects to see Omniture's headcount grow rather than shrink following the acquisition, and that the buy will result in automation of Omniture's services. Currently, Omniture reps spend 'months' with customers adding HTML code into every page on their web sites - in future this could be built into Dreamweaver and other products so that code is automatically included.

Omniture is Adobe's second biggest buy after the 2005 purchase of Macromedia Inc. for $3.4bn. Analysts are reported as saying that the price is 'expensive but not outrageous', and the timing seemingly opportune. The deal is expected to be accretive to Adobe's non-GAAP earnings in fiscal year 2010.

Web sites: www.omniture.com and www.adobe.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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