“On December 17, 2023, the Company and Figma mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement effective as of such date (the “Termination Agreement”). The mutual termination of the Merger Agreement was approved by the Company’s and Figma’s respective Boards of Directors. In accordance with the terms of the Termination Agreement, the Company will make a cash payment to Figma in the previously agreed amount of one billion dollars ($1,000,000,000) (the “Termination Fee”) within three business days following the date thereof. The Termination Fee is the sole and exclusive remedy under the Merger Agreement, and the Company and Figma have each waived any and all other claims in connection with the Merger Agreement and the transactions contemplated thereby.”
> the Company will make a cash payment to Figma in the previously agreed amount of one billion dollars ($1,000,000,000) (the “Termination Fee”) within three business days following the date thereof
Three business days to wire $1b, the week before Christmas. That has to be a fun phone call with the bank.
Here is how it is going to go, Adobe will tell their accountant to wire the money, the accountant will get the details from Figma. Adobe accountant will call their bank or maybe even go in to the branch. And tell them they are sending X to X. It will take a few stamps and confirmation and it will be done in about 5 mins. Some computer somewhere will go - 1 billion Adobe and + 1 billion Figma.
On the bank side nothing really happens unless Figma decides it wants to withdrawal all 1 billion. Then X bank will owe Y bank money, that loan will be balanced at some point. It will probably take a few days so Figma will be told it needs a few days.
Even if Figma decides to pay all their employees a share, that's also just - 50k Figma, + 50k Bob Smith in a computer somewhere.
There is no actual exchange of money until stuff is balanced at some point or you withdrawal. It's all just 1s and 0s in a record.
The problem here is not doing the transfer, but holding 1 cool B in cash being ready to transfer. Even if it is in liquid assets, 3 days to liquidate 1B is quite short.
I appreciate the insight from someone who has expertise in this area, but I think it's worth thinking about whether there are more constructive ways of phrasing this. Almost nobody who reads your comment will ever be in a position to "wire up to 999 million" at any point in their life, easily with just a mobile device or otherwise.
Sending a billion dollars is not the same thing as having a billion liquid dollars in one place to send. It is the difference between Accounts Payable and the Finance department of a company
> in the USA, the backoffice won't approve it without one-on-one interaction
For a business like Adobe, yes. They’ll probably want a verification call. Plenty of funds, however, handle similarly-sized transactions with completely electronic verifications.
You’d have to be a _very_ large payroll to have leverage over adp.
For many payroll operations between big employers and payroll processors it’s an inner bank ledger transfer as the big payroll processors have good reason to maintain accounts at many banks.
Vice versa is also true. If you have a very large payroll your treasury team is not put out by having accounts at lots of banks.
1 billi and they didn’t even have to give up any equity. I’m not a fan of the regulators screwing this deal the way they have (primarily due to the precedent they’re setting), but in the grand scheme of things, methinks this is actually a great outcome for Figma. 15 months of hassle with $1B cash at the end, to be delivered within 3 business days.
It’s a common term in these sorts of acquisition attempts now. AT&T paid T-mobile $3 billion.
A failed acquisition attempt can be very damaging to the company being acquired. You can lose employees who don’t want to work at the new entity that never happened. It can change your product roadmap (are you really going to invest in directions the acquirer won’t want after completion?) and make your executive team start job hunting. Etc.
So it’s not unreasonable or uncommon for the acquirer to agree to such a provision. And the board was presumably highly involved in a large offer like that.
If the value of Figma has fallen by more than $1B since they signed the deal (which I think it probably has) then passing up $1B to get out of the deal is not nuts, especially considering the regulatory opposition. Though it depends more on whether the value of Figma to Adobe and less the agreed acquisition cost has fallen below -$1B, since Adobe was presumably agreeing on a deal that they thought gave them significant surplus.
Nothing that is public that I've seen says this is true. You can get a bridge loan for $1b backed by whatever iliquid assets you have from any major bank, and then it's up to you how quickly you want to unwind other things. The loan might even be interest free if the bank wants to keep Adobe's business for other M&A activities.
I used the term bridge loan as a sort of umbrella term that might be technically not the best as my training isn't in finance and I know some of this stuff from exposure by proximity. What I'm referring to sometimes is also called a revolving line of credit, the most famous case was Enron's revolvers for example. The point is big banks will normally allow companies to take out large short term loans for this type of thing, usually having large amounts pre-approved.
It probably is in a bond or treasury note. The "within 3 days" probably covers the selling of the bond/treasury, waiting for the funds to clear, and then sending it over to Figma's account.
I'm sure a company as big as Adobe has multiple billions in capacity on revolving lines of credit at attractive rates from a syndicate of top banks. They do have cash and short term investments of close to $8b to borrow against!
I wander if that will make its way to early employees who were hoping for a liquidity event.