Merging of Adobe and Macromedia in the Near Future

May 25, 2005 – Through an announcement made last April 18, 2005 by Adobe Systems, it is apparent that their planned acquisition of Macromedia in an all-stock transaction valued at about $3.4 billion is definitely an event to look forward to in the very near future. By a merging, it would mean that a more powerful set of solutions for creating, managing and delivering compelling content and experiences across multiple operating systems, devices and media is to be expected.

According to Bruce Chizen, the chief executive officer of Adobe, they have definite plans of combining Adobe’s powerful development, authoring and collaboration software with the complementary functionality of Macromedia’s PDF and Flash. These plans would serve to provide customers calling for integrated software solutions that will deliver a wide range of content and applications that they can create and manage. This opportunity to serve the customers’ goals is the primary reason of Adobe for its interest to acquire Macromedia. Adobe calls it an industry-defining technology platform.

The Boards of directors of Adobe and Macromedia has already come up and approved the terms of agreement regarding the acquisition. According to the agreement, Macromedia stockholders are expected to receive 0.69 shares of Adobe common stock for every share of Macromedia common stock in a tax-free exchange, given that it is at a fixed exchange ratio. This represents a price of $41.86 per share of Macromedia stockholders according from the two companies’ closing prices last April 15, 2005. Macromedia stockholders stand to own approximately 18% of the combined company on a pro forma basis.

Further into the agreement, Chizen will continue as chief executive officer in the combined company. Shantanu Narayen will also remain president and chief operation officer. Macromedia’s president and chief executive officer Stephen Elop, meanwhile, will be joing Adobe as president of worldwide field of operations. Remaining as executive vice president and chief financial officer is Murray Demo. The Board of Directors will then be composed by Dr. John Warnock, Dr. Charles Geschke and Rob Burgess.

According to Elop, Macromedia and Adobe are decisive and keen on the combination in order to create and enable great experiences across a wide range of devices and operating systems. They are confident on the innovations and cutting – edge platforms waiting to be delivered once they are combined teams. Although they have identified opportunities for cost savings upon integration, they are keeping more focus on expanding and growing their business into new markets.

Adobe’s acquisition of Macromedia is expected to close in the Fall 2005 with customary closing conditions. There will also be the approval of both companies’ stockholders and regulatory approvals. Purchase accounting rules will guide the transaction and after the approval, Adobe will begin a 12-month stock repurchase initiative worth $1 billion. The repurchase is intended to further bring value to shareholders. Once purchase of Macromedia is approved, Adobe stipulated that there would be a neutral-to-slightly accretive condition on the first twelve months before the stock buy back. -30-