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Adobe adds Fotolia to its acquisition portfolio

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Fotolia is the latest of Adobe’s acquisitions

On December 11, 2014, Adobe (ADBE) announced the acquisition of Fotolia for approximately $800 million. Fotolia is Adobe’s third largest acquisition in the last ten years after the purchase of Omniture in 2009 for $1.55 billion and Macromedia for $3.15 billion in 2005.

Owned by Kohlberg Kravis Roberts, Fotolia was launched in 2004. The company is a marketplace for royalty-free photos, images, graphics, and high definition (or HD) video. It offers stock photo service with websites in 14 languages and 23 countries. Adobe expects the acquisition to close in the second half of fiscal 2015.

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If Adobe posts good results, it not only benefits Adobe investors, but also ETFs like the Powershares QQQ Trust ETF (QQQ) and the Technology Select Sector SPDR Fund (XLK), which have high exposure to Adobe.

The stock photography market is highly consolidated

As the above chart shows, Depositphotos, Zazzle, and Shutterstock (SSTK) rule this market. Google (GOOG) (GOOGL) is also a well-known player in this space.

Fotolia operates as a standalone stock service, which will be accessible to anyone as part of Adobe’s Creative Cloud, a subsegment of Adobe’s Digital Media segment that contributes approximately 65% towards overall revenues.

According to David Wadhwani, senior vice president of Adobe’s Digital Media segment, “The acquisition of Fotolia will reinforce Creative Cloud’s role as the preeminent destination for creative professionals….Creative Cloud is becoming the go-to marketplace for the creative community to access images, videos, fonts and creative talent, through critical creative services like Fotolia and our new Creative Talent Search capabilities.”

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