Why Adobe Was In A Hurry To Buy Omniture

One of my favorite types of securities filings usually comes a few days after an acquisition is announced and includes the “background of the offer.” This section provides an unusually detailed narrative of how and why a deal came together.

On Thursday, Adobe filed its “Schedule TO” with U.S. Securities and Exchange Commission regarding its $1.8 billion acquisition of Utah-based Omniture that was announced earlier this month. And amid all the fun, trivial details there are two interesting revelations:

First, Adobe pursued a reluctant Omniture hard, for several months, upping its offer twice, from $20 per share to $21.50 per share to beat out other bidders for the Utah-based company.

And second: Adobe made it clear for a couple months to Omniture that Adobe urgently needed to get the deal done by Sept. 15:

“On July 20, 2009, Mr. Narayen (Shantanu Narayen, president and CEO of Adobe) and Mr. James (Joshua James, president and CEO of Ominture) had a telephone conversation regarding the possibility of Omniture permitting Adobe to engage in initial due diligence on Omniture and the next steps in any such process. During this telephone conversation, Mr. Narayen stressed Adobe’s desire that the parties move quickly to evaluate any possible acquisition transaction, as Adobe had a strong interest in announcing such a transaction prior to September 15, 2009, which was the date that Adobe planned to announce its third quarter fiscal year 2009 earnings”

Ah yes, those pesky earnings. As it turned out, Adobe announced third quarter earnings and guidance that were, shall we say, less than spectacular. From MarketWatch:

“Adobe  said net income in the fiscal third quarter fell to $136 million, or 26 cents a share, from $191.6 million, or 35 cents a share, in the same period last year. Revenue for the period ended in August slipped to $697.5 million from $887.3 million. Excluding special items, Adobe said earnings for the quarter were 35 cents a share.”

So, what better way to distract analysts and shareholders than a grand ole merger with Omniture for $21.50 per share? Omniture stock closed at $17.33 the day before the deal was announced.

Other interesting tidbits:

  • Adobe began talking about acquiring Omniture back in late 2007.
  • Adobe initially approached Omniture to discuss partnerships. When Adobe raised the idea of an acquisition, Omniture executives played hard to get and said they’d rather stick to a partnership.
  • Adobe continued to press throughout the spring and summer until it finally wore down Omniture.
  • Omniture was one of only several acquisition targets considered by Adobe, but the document doesn’t identify the others.
  • Likewise, Omniture claimed it had other potential bidders, but didn’t identify them.
 

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