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Adobe-Ture, an expensive deal?

6th October 2009 by Paul Newbury | News & Events

I was very interested to hear news of Adobe’s recent acquisition of web analytics provider Omniture, particularly the $1.8 billion cash that the web goliath thought necessary to pay for the provider. Not only does this represent more than 6 times the company’s annual revenue but also more than 25 times the companies EBITDAR* figure (company valuations commonly take between 8-13 multiples of this figure). So why the mark up?

The two companies are broadly in the same vertical so there are almost no cost-savings from the synergies in the deal. Additionally, Adobe are exposing themselves to increased competition from the likes of Google who offer a lighter ‘free’ Web Analytics solution to Omnitures feature rich (but one of the more expensive ) platforms.

On the face of it, the reasoning for such a move is there –Adobe’s plethora of website development tools cover the first three segments of the web development cycle – Design, Build and publish. Omniture’s portfolio of integrated analytics and advertising tools then more than covers the remaining analysis and optimisation stages. If Adobe can overcome the technicalities of integrating the two solutions they could offer the first start-to-finish package for website design and optimisation.

What does this mean to the Web Analytic market in general? We have now seen two high profile acquisitions recently with Yahoo! buying less well known analytics provider index tools last year with both are using their new purchases to enhance their existing products.

Microsoft now stands out like a sour thumb as the only major web related company without its own Web Analytics division. It might not be too long before they feel the need to go shopping. Seen as they have integrated WebTrends on pretty much all of their sites, it’s clear who would be the front runner when that happens…

*Earnings before Interest, Tax, Depreciation, Ammortalisation and Rent a common statistic used for company valuations.

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