INDIA BUSINESS WORLD - May 2005
THE MONTH THAT WAS

ADOBE TO BUY MACROMEDIA'S B'LORE DEVELOPMENT CENTRE

As global techies consolidate, they are leaving a trail of mergers in India too. Close on the heels of Oracle buying Hexaware and Convansys development centres, $1.7 billion Adobe is now acquiring Macromedia's Bangalore-based development centre. Macromedia's 8.1 % stake in Mumbaibased mobile gaming company Indiagames is learnt to move to Adobe India too.

One of the largest desktop software company, Adobe has recently acquired multimedia software firm Macromedia Inc for about $3.4 billion in stock. Best known for its Acrobat Web document sharing software, Adobe is expecting to enhance its lead in the market for creating and distributing digital documents.

Though Adobe as well as Macromedia India heads refused to confirm or deny the merger of India entities, sources in the company confirm that it is only logical that the two India development centres will be merged once the transaction is completed. The transaction is expected to close in four to six months. "It is too early to talk about these details These issues will be sorted out in next few months when the transaction is completed,'' says Naresh Gupta, head, Adobe India.

A combined stake of 18.2 % in Indiagames was acquired by Macromedia and Cisco for a total of $4 million from existing investor TOM Online recently. Of this, Macromedia's 8.1 % stake is now expected to be transferred to Adobe after closure of Macromedia sale to Adobe. Indiagames is a home-grown developer of games and other software for the mobile handset market.

Adobe's India development centre, housing over 500 techies, is its second largest outside the US and the third largest overall. Contributing close to 20% of the company's engineering efforts, its India development centre has already filed twenty five patents. Overall, the company plans to invest a total of $50 million by 2007 in India. Macromedia's R&D team today is estimated to be 150-strong and is expected to grow to 250 by the year-end.

Adobe's internal communication also talks of "integration team reviewing the worldwide location of both companies'' but does not give details of what facilities will finally be integrated. "Where it makes sense, we anticipate the combined company will consolidate facilities as appropriate. Between now and the close of this transaction, the integration team will review the worldwide locations of both companies and make recommendations to the integration steering committee regarding future plans based on our hiring plans and location of our customers,'' says Adobe's internal website.