If Adobe was going to buy someone we would have said that it should be a DRM specialist that could help it with its awkward stance on video Digital Rights management, or it might be a streaming specialist that can help it get over its proprietary problems surrounding the fact that it doesn’t use HTTP for its video streaming (but then again that wouldn’t work well on phones would it). But we can also see the logic of going out and adding Omniture, a web analytics firm, which can provide tools to all of its Flash video customers (and others) which tell it about traffic and provide ecommerce services.
However the price tag has irked many on Wall Street set at $1.8 billion, and Adobe’s company’s share price fell about 8%, not far short of what it is paying for the asset. Adobe will commence a tender offer to acquire all of the outstanding common stock of Omniture for $21.50 per share in cash.
Adobe said the deal would enable the two to combine Adobe’s content creation tools with Omniture’s measurement tools to support digital content and e-commerce ‘across all digital content, platforms and devices.’
Adobe had just gained approval of investors for riding out the storm of the last two quarters relatively well, with revenues only off 21% and profits down 29%.
It was the acquisition that spooked the market, with investors perhaps thinking that after such a savage recession, companies should be shopping in the bargain basement, not paying premium prices.
Omniture stock jumped 22% on announcement of the deal, to $1.7 billion, still under the bid price, but getting closer. But that means that it has paid a premium for a company that is falling in revenues, due to it being up against Google analytics which offers similar, but free, services. The company is therefore loss making, running short on cash and has falling revenues. So why pay a premium?