Wall Street: Adobe’s $1.8 billion Magento acquisition is a ‘sensible extension’ to help beat Salesforce (ADBE)

Shantanu Narayen

  • Wall Street responded favorably Monday to Adobe’s plans to acquire the e-commerce platform Magento for $1.68 billion. 
  • Analysts called it a "sensible extension" into digital commerce for Adobe, and "the best option" to help Adobe compete with rivals like Salesforce in commerce.

Wall Street responded favorably on Monday following Adobe’s announcement that it plans to acquire the privately-held e-commerce platform Magento for $1.68 billion. 

Adobe shares popped a slight 0.68% in after hours trading, though analyst notes remained positive on the news.

"Overall, we view the acquisition as a sensible extension into the digital commerce market," said Evercore ISI analyst Kirk Materne in a note Monday.

Magento’s platform competes with companies like Shopify and BigCommerce. Analysts lauded the deal for its potential to position Adobe as a strong contender against Salesforce in the arena of digital marketing and customer relationship management (CRM). 

Adobe, best known products like Photoshop and Adobe Reader, plans to add Magento’s e-commerce product to its Experience Cloud, which currently includes analytics, advertising and marketing tools. The combined platform with serve both business-to-business and business-to-consumer companies. 

Materne noted that he expects that the Experience Cloud will outperform analyst estimates "on an organic basis" following the acquisition. 

Alex Zukin, an analyst with Piper Jaffray, called the acquisition "the best option for a move into the $13 billion" e-commerce market.

"With the percentage of transactions in both the B2B and B2C space rapidly accelerating toward digital channels, any customer-centric enterprise software player, in our minds, needs to have a commerce offering," Zukin said. 

Despite their support, the analysts did express some concern that Adobe’s acquisition will be dilutive to earnings, since Adobe will not benefit from Magento’s revenue in the near-term.  

Magento brought in $150 million in revenue in 2017, and Zukin said he expects that number to reach $200 million in 2018. 

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