Adobe Buys Marketo in $4.75 Billion Deal

Last week rumors swirled over whether Adobe would buy Marketo. On Thursday the rumors became reality as Adobe announced the acquisition of the marketing automation business for a price tag of $4.75 billion.

Vista Equity Partners purchased Marketo for $1.8 billion in May of 2016 and held it for only two years before making a profit of more than $2.95 billion.

Adobe, which also just purchased Magento for $1.6 billion in May, will now have a strong enterprise marketing position as it competes against the likes of Microsoft, Oracle, SAP and Salesforce.

Combined with Magento, it gives Adobe marketing as well as ecommerce and at a price of slightly over $6 billion.

The purchase of Marketo will widen the lead Adobe has in customer experience across B2B and B2C and will put Adobe Experience Cloud at the center of all its marketing, said a vice president at Adobe in a prepared statement.

One online research analyst sees this as Adobe’s way to compete better with Salesforce in that space. With Adobe buying Marketo it says they are very serious about pushing into B2B and furthering the Adobe-Microsoft vs Google-Salesforce moving ahead.

Adobe posted earnings of $2.29 billion for its third quarter last week, which was a year over year increase of 24% and a new company record.

While Adobe could soon become a $10 billion company, the vast majority of income it makes continues to be from its Creative Cloud, which includes InDesign, Illustrator and Photoshop, among other Adobe software successes.

However, for a very long period, the company has wanted to become more than just a creative software company. It has wanted part of the enterprise marketing pie.

Until now, that segment of the business, which includes analytics and marketing software, has lagged far behind its business of Creative Cloud. In its most recent report, revenue for Digital Experience, which is where this is counted by Adobe, was $614 million. While it is growing, or up 21% compared to last year, there is potential for much more.

Adobe held cash of less than $5 billion after the acquisition of Magento, but its stock price has dramatically increased the past year, by almost $116 per share.

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