Adobe Acquires Marketo: A Big Take Over but Why Isn't Share Price Rising?

Adobe acquires Marketo for a whopping $4.75 billion.

Despite this news, the software giant is currently in the red, so are investors wary of this acquisition?

Stocks are down -2.08%. But maybe that’s not such a big deal in the grand scale of things; Adobe (NASDAQ:ADBE) has, after all, grown its stock 78% in the past year alone.

Let’s look at this acquisition further.

Adobe Acquires Marketo

Marketo is a software company focused on account-based marketing, including email, mobile, social, digital ads, web management, and analytics.

The company was acquired by Vista (NYSE:VSTO) for $1.8 billion in 2016. Today’s sale means Vista has made a nice $2.95 billion profit.

Because Adobe has acquired Marketo, it will now take advantage of its client list, which includes Canon (NYSE:CAJ), Charles Schwab (NYSE:SCHW), Eventbrite (NYSE:EB), GE (NYSE:GE), Microsoft (NASDAQ:MSFT), and Hyundai (OTC:HYMTF).

Brad Rencher, executive vice president and general manager of Digital Experience at Adobe said:

“The acquisition of Marketo widens Adobe’s lead in customer experience across B2C and B2B and puts Adobe Experience Cloud at the heart of all marketing.”

The majority of Adobe’s revenue comes from its Digital Media business, which includes the Creative Cloud software. Marketing software is included in the Digital Experience business, which generated $614 million in revenue in the most recent quarter.

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Adobe has Acquired Marketo

Adobe announced its earnings report last Thursday. The results were positive and showcased a 24% year-over-year increase for the company. It was also a new record made. The majority of Adobe’s revenue comes from its Creative Cloud design software, which has become an industry leader in the world of marketing and design.

If you’ve ever heard of Photoshop, InDesign, and Illustrator, well, they are a part of this software package.

Future

The company has wanted to build on its creative software by offering more-rounded marketing enterprise tools. Adobe has acquired Marketo for this reason. It also acquired Magento in May for $1.6 billion so as to set itself up as a leader in enterprise marketing software and systems.

Will Adobe hit the $10 billion market cap this year? If investors can get on board with its acquisitions, maybe so.