Adobe lower as UK competition watchdog sees harm from $20 billion Figma acquisition

Updated at 7:58 AM EST

Adobe  (ADBE) - Get Free Report shares moved lower in early Tuesday trading after competition officials in Britain hinted they would rule against the group's planned $20 billion acquisition of privately-held design startup Figma.

Britain's Competition and Markets Authority (CMA) said Tuesday that the deal, which was first unveiled in September of last year, would likely "harm innovation for software used by the vast majority of UK digital designers" following a probe launched earlier this summer. 

The provisional finding, which is expected to be formalized early in the new year, will test Adobe's ability to close the transaction, which it told investors in September will "reimagine the future of creativity and productivity."

"The digital design sector is worth nearly £60 billion to the UK - representing 2.7% of the national economy - and employs over 850,000 people in highly skilled work," the CMA said. "The software this sector uses is pivotal to its success, so the CMA has from the outset been very focused on ensuring this merger doesn't adversely affect such an important part of the UK economy."

"Adobe and Figma are two of the world leading providers of software for app and web designers and our investigation so far has found that they are close competitors," the report added. "This proposed deal, therefore, has the potential to impact the UK's digital design industry by reducing choice, innovation and the development of new competitive products."

Adobe shares were marked 0.74% lower in pre-market trading to indicate an opening bell price of $614.70 each.

Adobe said it September of last year that it will use both cash and stock to pay for Figma, a San Francisco-based platform design group, which is used by companies such as Zoom Video ZM and Coinbase COIN.

The deal includes a $1 billion break-up fee for both sides, with Figma CEO Dylan Field expected to continue leading the group when its folded into Adobe. 

The European Commission, which is also looking into the deal, told Adobe earlier this month that it may "reduce competition in the global markets for the supply of interactive product design software and of other creative design software."

• Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.