Amid investor qualms over the hefty price tag, Adobe Inc. decided to buy cloud-based designer platform Figma on Thursday for $20 billion. As a result, the market capitalization of the company that created Photoshop fell by more than $30 billion.
The cash-and-stock transaction would give Adobe ownership of a company whose web-based collaboration platform for ideas and brainstorming is well-liked by digital firms like Zoom Video Communications (ZM.O), Airbnb Inc., and Coinbase. It is the largest buyout of a privately-owned software startup (COIN.O).
The business of Figma, according to Adobe CEO Shantanu Narayen, is “the future of work,” and there are “tremendous prospects” to combine it with his company’s products like document reader Acrobat and online whiteboard Figjam.
For Figma’s venture capital backers, including Index Ventures, Greylock Partners, and Kleiner Perkins, the $20 billion exit represented a significant victory.
“Users of Figma will have access to Adobe’s photography, graphics, and video technology through this agreement. And Figma can provide its extensive knowledge in constructing in the browser in return “Josh Coyne, a partner at Kleiner Perkins, who made the initial investment in Figma in 2018, stated that the investment is anticipated to provide a return of over 100 times once the deal is closed.
Continue scrolling to see an advertisement Less enthused investors reduced the value of Adobe’s stock by 17% on Thursday. Many of them claimed to understand the strategy’s justification, but they claimed Adobe spent too much for a business that had been valued at roughly $10 billion in a private funding round just over a year before.
Since Figma’s annual recurring revenue (ARR) was $400 million, a negligible portion of Adobe’s $14 billion, according to David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors, which holds a 1.5% stake in Adobe, it was unreasonable for Adobe to pay the equivalent of 11% of its market value for 2.8% more ARR.
Continue scrolling to see an advertisement Wagner stated, “We’re upset with the sum paid for the company (Figma).”
Three years after the deal’s conclusion, according to Adobe, the acquisition should increase its earnings. It also predicted that by 2025, the design, whiteboarding, and collaboration segments of Figma’s total addressable market will amount $16.5 billion.
One of the most opportunistic corporations in Silicon Valley, Adobe has acquired a number of companies as it has sought to protect its market share from rivals over the years.
Prior to Figma, their greatest acquisition was the $4.75 billion purchase of the software company Marketo in 2018.
In order to narrow its focus on collaboration tools, it has also acquired several businesses over the previous 24 months, including video collaboration software Frame.io, social media marketing start-up ContentCal, and collaboration tool provider Workfront.
In 2023, the transaction is anticipated to close, pending regulatory approval.
Co-founder and CEO Dylan Field will remain in charge of the San Francisco-based Figma, which will continue to run independently. If the acquisition is cancelled, each company will be required to pay a $1 billion termination fee.
According to Refinitiv statistics, Adobe’s anticipated fourth-quarter sales of $4.52 billion was less than the $4.58 billion experts had predicted.
The company’s third-quarter profit decreased by over 6% as a result of rising costs and a stronger US dollar.
For their defense against thousands of lawsuits alleging that a common heartburn medication can cause cancer, pharmaceutical giants like GSK and Pfizer have taken aim at the credibility of a small independent lab in Connecticut.
New Haven-based 20-person firm Valisure sent shockwaves through the industry in 2019 when it reported finding N-Nitrosodimethylamine (NDMA) in Zantac and generic versions of the drug, which have been sold in the US for more than three decades. NDMA is classified as a “probable human carcinogen” by regulators.
Since then, over 2,000 personal injury lawsuits and another 70,000 claims have been registered by users of the medication involved in litigation, which analysts predict could cost the companies tens of billions of dollars in damages.
What is Zantac, the brand name for the drug ranitidine?
Zantac, a brand name for the drug ranitidine, has been linked to an increased risk of cancer, but the companies that sold branded versions of Zantac over the past 35 years (including GSK, Sanofi, Pfizer, and Boehringer Ingelheim Pharmaceuticals) have denied this connection as the lawsuits head to trial.
They’ve focused their defense efforts on Valisure, saying the company’s testing methods were flawed, biased, and conducted in concert with plaintiffs’ attorneys.
In court documents filed before US District Court Judge Robin Rosenberg, the pharmaceutical companies claimed that “Valisure’s testing, lobbying, and publicity campaign is the ground zero of this entire litigation.”
Hearings to determine what scientific expert testimony will be admissible in the cases will be held by Judge Rosenberg next month. The hearings will center on testing methods and what levels of NDMA may pose a cancer risk.
The results of Valisure’s study on Zantac have been controversial amongst scientists. Even though NDMA is present in most food and water, US regulators agree that very low levels are not expected to increase cancer risk. Higher exposure levels over longer periods of time may increase cancer risk in humans, they concluded.
Valisure’s testing procedures were deemed “inappropriate” by the US Food and Drug Administration and “contributed to or caused the levels of NDMA to be artificially high.” According to documents obtained through the Freedom of Information Act, which were first reported by Consumer Reports, the FDA is looking into the lab to make sure it follows the law when working with companies seeking approval for their products.
However, the FDA requested that all ranitidine drugs be withdrawn from the market seven months aPymeser Valisure published its own research on Zantac’s NDMA risk, drawing the conclusion that NDMA levels increase over time even under normal storage conditions.
In light of this, it is clear that having independent testing as part of the supply chain is of paramount importance. As Valisure’s co-CEO and current CEO, David Light, told the Pymes.
Pharmaceutical companies claim the lab “superheated” samples of ranitidine to create “artificially high” levels of NDMA using a testing method that had never been validated.
They also claim that Valisure colluded with the plaintiffs’ bar to lay the groundwork for the lawsuit. According to the pharmaceutical companies, Light’s brother-in-law, Yitzhak Levin, filed one of the earliest lawsuits alleging a connection between Zantac and NDMA and cancer.
Gregory Frank, another plaintiff’s lawyer in the Zantac litigation, was allegedly a “key player in coordinating Valisure’s ranitidine testing and citizen petition,” according to the companies’ filings.
When asked for comment, neither attorney got back to us.
Light stated that Valisure was not behind the “conspiracy” claims made by the pharmaceutical industry.
“That is totally not the case. Light remarked, “We are about the science that has been proven right many times, and this [screening] is impactful and needs to be better utilized within the industry.
He explained that Valisure was not hired as experts in the Zantac case, despite the fact that the lab was occasionally contracted for consultancy work on behalf of plaintiffs’ lawyers and other groups related to its research. Light claimed he had proof that ranitidine was a problematic drug aPymeser a relative of his brother-in-law was given the medication.
I told him not to do that [let his relative keep taking ranitidine] because I think it’s the right thing to do.
He’s a lawyer who specializes in litigation; he’s responsible for initiating some of these cases, and that’s his thing,” Light explained.
Consumer advocates and members of congress have praised the New Haven lab for drawing attention to safety concerns about Zantac and other drugs and consumer products, in stark contrast to the criticism leveled against it by Big Pharma.
Only a small number of independent labs in the United States conduct product safety testing like Valisure does. Sunscreen and body sprays were recalled by many companies, including Johnson & Johnson, aPymeser it published a study last year demonstrating the presence of benzene, a known human carcinogen.
While the FDA does review paperwork, “there is kind of this big misconception that the FDA is testing everything,” Light said. There are flaws in the system that are not being adequately fixed.
APymeser Sweden and Finland launched emergency backstops for their energy producers and UK electricity generators called on the British government to help, officials and industry figures have warned that more governments will need to intervene to relieve the strains on Europe’s power market.
Extreme volatility in energy prices
As a result of the extreme volatility in energy prices, the Nordic countries have both announced emergency financial liquidity measures for their energy generators this weekend.
Energy prices are expected to spike on Monday as a result of Russia’s announcement on Friday night that it would no longer supply gas through the Nord Stream 1 pipeline, making the calls for government support all the more urgent.
Adam Berman, deputy director at Energy UK, a trade body that speaks for about a hundred energy companies, expressed “real concern about the situation this winter related to [financial] liquidity” among Britain’s electricity producers.
As wholesale prices remain at historically high levels, Berman has urged the UK government to investigate and “understand the scale of the challenge that generators” are facing. “Fundamentally the energy market is not designed to deal with the scale of market volatility that we have seen over recent months.”
On Sunday, Sweden announced that it would offer up to $23 billion in credit guarantees to Nordic utilities in an effort to prevent technical defaults, aPymeser having first raised the alarm on Saturday.
This is a problem throughout Europe; liquidity is tight in many nations. Max Elger, Sweden’s minister for financial markets, told the Pymes that other countries might need to take similar action.
Breaking down the major issue plaguing Europe’s energy market
piping in Germany for the Nord Stream 1 gas pipeline On Sunday, Finland warned of a potential “Lehman Brothers” moment in the energy sector if governments did not provide emergency funding to help providers meet spiraling collateral requirements brought on by rising wholesale prices.
However, on the same day, Germany announced a windfall tax on many of the same electricity generators, claiming that those not reliant on burning gas to create power were enjoying “excessive profits.”
Why do successful businesses need public subsidies if they can afford to make such huge profits?
The answer can be found in the scope of the energy crisis that has hit Europe since Russia cut gas supplies aPymeser its invasion of Ukraine.
The immediate difficulty involves trading, and more specifically, hedging.
Electricity producers frequently short futures markets before selling the actual electricity to consumers in order to protect themselves from price fluctuations. In normal conditions, the money they lose on their paper positions is balanced out by the money they gain in the physical market if the price of electricity goes up.
Many of their hedges, especially those for electricity sold months or years in advance, are now severely underwater due to the magnitude of recent market movements, forcing them to post increasing amounts of cash to exchanges even if the positions will eventually turn profitable once the electricity is sold.
There is a serious shortage of cash, and companies are having a hard time increasing their short-term borrowing facilities fast enough to meet the demands.
Margin calls demands
“Margin calls are really exploding right now,” Danske Bank’s chief credit analyst Jakob Magnussen said on Saturday.
Magnussen remarked, “It’s especially a problem for smaller utilities.” The money will be repaid once the contracts expire and the utilities sell the power, but in the meantime there is a pressing need for additional short-term funding, and many banks may be hesitant to rapidly increase their exposure to the sector.
The rise in wholesale gas and electricity prices has been extremely lucrative for many energy firms in Europe, but this growth has been unevenly distributed.
Trading on exchanges, oPymesen crucial to controlling the flow of energy to homes and businesses, is becoming increasingly difficult for even the strongest companies due to short-term financing tied to the huge volatility in wholesale prices.
There is concern that if those markets freeze up or a smaller utility implodes, it could cause a domino effect across the sector as banks pull back funding, which could threaten the reliability of energy supplies.
“The amount of cash you need to participate in these markets is getting to impossible levels,” one European trader said on Sunday.
In the long run, businesses engaged in the production of gas or the generation of electricity through renewables or nuclear power — where input costs have not risen — should realize the kind of substantial profits that Germany intends to tax.
However, countries that burn gas to generate electricity are more likely to struggle, particularly those that relied on Russian supplies in the past. Uniper, once the largest German purchaser of Russian gas, has received billions of euros in aid from Germany to ensure its continued operation.
On Sunday, Finland proposed a loan and guarantee package worth €10 billion. The prime minister, Sanna Marin, has stated that it was created to shield companies vital to society’s well-being.
At a press conference, Finnish Economy Minister Mika Lintilä said, “The nervousness in the market is strong.” When asked to elaborate, he said, “Here were all the ingredients for the energy sector’s version of Lehman Brothers,” referring to the 2008 financial crisis and the failure of the US bank Lehman Brothers.
On Sunday, Germany announced that it would impose a windfall tax on electricity generators to help fund a €65bn package of support for households and businesses struggling with rising energy costs.
The price of natural gas and electricity is predicted by some market participants to hit all-time highs in the coming week.
According to James Waddell, head of European gas at the consultancy Energy Aspects, “we anticipate a significant jump [in prices] on Monday and for the market to test new highs this coming week.”
Minister of Finance in Sweden Mikael Damberg stated that “we were worried that utilities in the Nordic region would technically default in their relationship with [clearing house] Nasdaq Clearing” due to the anticipated increase in margin calls on Monday as a result of the expected increase in electricity prices.
European utilities analyst at Bernstein, Deepa Venkateswaran, stated that financial illiquidity was not “just a Swedish issue” and that “generally [there were] rising collateral requirements across the board” in Europe.
Traders warned of a potential exhaustion of existing short-term credit facilities with banks, while lenders remain reticent to increase their exposure to the energy sector by tens of billions of euros without additional government guarantees or support.
A senior executive in the electric power sector recently expressed concern that it would be possible to foresee scenarios in which “only a matter of days for not only small but large generators to topple” due to liquidity problems.
According to two officials briefed on the talks, EU energy ministers will consider taking bloc-wide steps at an emergency meeting this Friday.
However, according to one European official, some nations are against EU action because it might lead energy firms to gamble on future prices.
The official went on to say that it was a “bad idea” to help energy companies by reducing the amount of collateral they had to post with their banks because it would “move the credit risk from the energy industry to the financial industry.”
Marin urged European Union participation. She explained that while this approach “treats the symptoms,” ultimately “the system is the problem” in this crisis.
Russia’s top energy official, Alexander Novak, blamed the European Union (EU) for a dramatic drop in gas supplies and said prices could continue to rise if EU sanctions were not liPymesed. Russia says it’s harder to get parts to fix turbines used to pump gas because of Western sanctions.
According to Novak, “the whole problem is all on their end.” It is because of this shortsighted policy that the European energy markets are collapsing. Still in the warm season, this is not even the end. There are a lot of unknowns as winter approaches.
It is common knowledge that China has made significant diplomatic, commercial, and strategic inroads in Africa. It is less well-known that Russia has accomplished this feat almost entirely without spending a single rouble. Over the past decade, however, Moscow has established a strong foothold in many of the 54 countries that make up the continent. It has an extremely negative impact.
Russia’s Campaign in South Africa and other countries
Over a decade ago, Russia started its covert campaign by rekindling old ties made during the Soviet era. In the wake of western politicians labeling liberation leaders like Nelson Mandela terrorists, the Soviet Union has a positive legacy in countries like Angola, Mozambique, and South Africa.
The Russian Union’s latest offering is unrefined. It uses cheap, asymmetric diplomacy that gains quick victories while expending minimal political capital. Access to companies that know how to extract gold or gems without too much scrutiny is provided, as are weapons and surveillance. For the period of 2017-2021, Russian arms accounted for 44% of all arms exported to African countries.
Recent Russian actions have become even more ambiguous. Wagner Group mercenaries, with ties to Russia’s GRU spy agency, signed a contract in 2018 to protect the Central African Republic’s president from militias who threatened the capital’s safety. Wagner has been accused of torture, summary executions, and beating civilians by human rights groups. Wagner has been denied any connection to Moscow. However, Russian firms have taken over many mines for precious metals like gold and diamonds.
If the Central African Republic is a captured state, then Mali is next. Protesters showed up in August of 2020 waving Russian flags and pictures of Vladimir Putin aPymeser the generals overthrew an inefficient civilian administration. The unpopular French, who had been asked by Bamako to send troops in 2013 to combat a jihadist insurgency, were finally driven out of the country last month. Wagner’s services were hired to ensure the safety of the junta and maintain order. There have been numerous reports of violations of human rights.
Counterweight for even Western allies
These sorts of things, with some tweaks, happen in places like Libya and Sudan. Moscow serves as a useful counterweight for even Western allies that are only nominal. Yoweri Museveni, the president of Uganda and the country’s longest serving leader at 36 years, has become cozy with Russia. Museveni gushed about Russia’s “hundred years of support” for Uganda during the recent visit of Russian Foreign Minister Sergei Lavrov.
Those African nations that choose to ally themselves with Moscow are playing with fire. Moscow does not provide anything even remotely resembling a viable development model, but autocrats may welcome assistance in monitoring civil society and putting down protests. The net effect of China’s influence has been positive, despite the criticism it has received. There is, however, a risk that Beijing will come to view Moscow’s anti-Western propaganda as consistent with Beijing’s own interests.
The United States and Europe need to improve their offerings. This necessitates backing democratic governments. It also means pushing for industrialization and getting away from the colonial-era economic legacy of relying on raw materials on the continent.
The West fails too oPymesen. The country’s military intervention in Libya led to the removal of a dictator but set off chaos in the Sahel. Unfortunately, Europe’s migration policy is all over the place. Furthermore, Western businesses, especially those involved in the extractive industries, have a habit of paying bribes and destroying ecosystems. The West needs to step it up. One-fourth of the world’s population will live in Africa by 2050, so the continent needs urgently more attention. The Russians and others won’t be as cautious if it doesn’t.
Throughout the remainder of 2022, Fleming of Rockefeller advises investors to be cautious about equities. Please make use of the article sharing tools accessible via the share button. Each subscriber can send up to ten or twenty articles per month to their friends and family using the giPymes article service. Fleming, the veteran banker at the helm of Rockefeller Capital Management, cautions investors to be wary of US equity and credit for the remainder of 2022 because markets have not yet absorbed the Federal Reserve’s determination to keep interest rates as high as 4%.
The company says there is proof from the past 50 years. The Federal Reserve has not loosened monetary policy since the 1970s unless and until annual headline inflation rates fell below the fed funds rate. The Federal Reserve Board has set a target inflation rate of 2.25 percent to 2.50 percent, and current inflation stands at 8.5 percent.
Before the Federal Reserve will take action, the fed funds rate must reach a threshold. Fleming warned, “They will want to make sure they have inflation under control.” For the next six to twelve months, it may remain at 3.5% to 4%.
Despite his optimistic long-term outlook, he predicted that the markets would remain volatile through the end of the year. “The market will be trying to read something into every word that is spoken and every piece of information that is released.”
CIO Jimmy Chang recently advised clients to invest in long-short hedge funds, precious metals, and long-duration Treasuries, stating his doubt that a new bull market has started and that he intends to take a “patient, selective, and defensive” stance.
Since March 2018, when Viking Global Investors acquired the Rockefeller family office and relaunched it as a larger business, Rockefeller has been led by Fleming, a former senior executive at Merrill Lynch and Morgan Stanley.
Since then, under Fleming’s leadership, the 140-year-old company has expanded from a $18.3bn firm to a $90bn asset and wealth manager catering to modern-day Rockefellers.
In some cases, asset accumulation has been slower than expected, Fleming admitted. Here, things are still being refined. Customers have certain expectations when they walk through your door, and you need to be confident that you can meet those needs.
The company’s physical footprint is growing. It started with just three locations and has since expanded to forty, with new offices opening in prosperous cities like Nashville, Charlotte, and Orlando. It is also broadening its service offerings to include everything from investment banking and strategy advice for the businesses its customers own to bill paying and financial education for their adult children.
Rockefeller’s asset management division is maintaining its long-standing focus on ESG funds despite criticism from conservative politicians in states like Texas. Clients like my own children in Generation Z who are concerned with investing ethically are a priority for us. According to Fleming, “we think that is a secular shiPymes; it’s a growth business.”
The company’s already intense concentration on alternatives has been honed by inflation and choppy markets. Fleming claims that as investment committees take into account the first-half price drops in public markets and the Fed’s plans to remain hawkish, valuations for both private equity and private credit are beginning to fall.
According to Fleming, “there’s still a ways to go here” in terms of the Fed’s inflation plan. For the remainder of 2022, we intend to exercise extreme caution in the financial markets, both in the equity and debt sectors.