Adobe Inc. has decided to acquire Semrush Holdings Inc. in a $1.9-billion all-cash deal, as the Photoshop maker looks to strengthen its marketing tools for an AI world.
The San Jose, California-based company will pay $12 per share of Semrush—a 77.5% premium to the stock’s last closing price, according to a statement on Wednesday. Semrush shares jumped 74% to $11.79.
The Adobe-Semrush deal, expected to close in the first half of next year, will allow Adobe to help marketers better understand how their brands are viewed by online consumers through searches on websites and generative AI bots such as ChatGPT and Google Gemini.
Semrush designs and develops AI software that helps companies with search engine optimisation, social media and digital advertising.
Adobe-Semrush deal
“The price is steep as Semrush isn’t a massive revenue engine on its own, so Adobe is likely paying for strategic value,” Emarketer analyst Grace Harmon told Reuters. “The payoff could be high too if Adobe can quickly turn Semrush’s data into monetisable AI products.”
Adobe’s tools—including Photoshop, InDesign, Acrobat and Illustrator—are household names in design software, widely used by enterprises, students and creative professionals to edit, create websites, brochures and graphics. But investor pressure to ramp up monetisation of AI products and features amid intensifying competition in the digital design industry has weighed on its shares, which have fallen more than 27% so far this year.
“While we are positive on Adobe restarting its M&A engine given the success that it has seen with this motion over the years…this deal likely does little to answer the questions revolving around the company’s creative cloud business,” William Blair analysts said in a note.
Adobe raised annual revenue and profit forecasts in September, helped by strong demand for its design software. A month later, the company said it was working with OpenAI to let users directly control one of its apps through ChatGPT.