Adobe to buy Omniture for US$1.8 billion

Adobe has agreed to buy Web analytics company Omniture for US$1.8 billion in cash, the companies said Tuesday.

The price San Jose, California-based Adobe is paying for the company, which is $21.50 per share, is at a 45 percent premium over Omniture's average closing price for the last 30 trading days, Adobe said.

On a conference call Thursday, executives wouldn't say if there was a bidding war with other companies to buy Omniture.

Adobe, known for multimedia design, Web-development and document-creation software such as Flash, Dreamweaver and Acrobat, said the purchase will help the company add Web analytics and optimization capabilities directly to those products.

This kind of ability to measure what kinds of media, Web applications or Web pages are popular with users is becoming essential as more and more business is being done on the Web, particularly in the area of online advertising, said Forrester senior analyst John Lovett. He said a recent Forrester study found that 73 percent of companies doing business on the Web had some kind of analytics technology in place.

"It's a ubiquitous technology that is in high demand at companies that are placing any parts of their business online," he said.

For designers, developers and online marketers using its tools, this new capability will help them streamline how they create and deliver relevant content and applications, Adobe said.

Advertisers, advertising agencies, publishers and online retailers can improve the experience of their end users and get more out of their digital media through the new analytical capability, the company said.

On a conference call Tuesday, Adobe CEO and President Shantanu Narayen said that the idea for a merger grew out of conversations with Omniture's CEO, Josh James, and with customers who wanted more out of the digital media they were creating using Adobe's products.

For example, Narayen said people were using Flash to create online advertisements, but wanted a way to better understand click-through rates so they could see which ones were working. They thought there might be a way for Adobe to build that into their products, and "a number actually wanted us to integrate with solutions like Omniture," he said.

Similarly, Adobe, too, found it wanted more information from the ads and digital media it was putting up on its own site. Omniture had been an Adobe partner for some time, and in conversations with James, Narayen said the two realized their companies had "the same vision" for how digital media and rich Internet applications could include Web analytics and optimization technology.

Forrester's Lovett said the deal will put Adobe a step ahead of other companies creating tools for developing digital content.

"The combination of these two technologies makes sense -- it's the creative meeting the measurement side of things," he said. The deal creates a "big opportunity" to allow content creators to potentially measure the impact of everything they do, Lovett added.

Following the close of the deal, Omniture will become a new unit within Adobe, the company said. Omniture's CEO James will join Adobe as senior vice president in charge of that business unit, reporting to Adobe President and CEO Shantanu Narayen.

The companies expect the deal to close in the fourth quarter of Adobe's fiscal year, which ends Nov. 27.

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