Adobe shares plunge on deal to gather design platform Figma for $20 billion

Thursday that it will acquire design software firm Figma in a deal worth about $20 billion in cash and stock. Shares of Adobe sank 17%, their biggest plunge since 2010.

Figma, founded in 2012, creates cloud-based design software that allows teams to collaborate in real time.

Figma, whose backers include the likes of Index Ventures, Greylock Partners and Kleiner Perkins, is expected to generate more than $400 million in annual recurring revenue this year

That means Adobe is paying in the neighborhood of 50 times revenue at a time when sales multiples for cloud software are contracting dramatically from their record highs reached last year.

Adobe said it will integrate some of the features from its other products, such as illustration, photography and video technology, into Figma's platform.

"Adobe's greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions," said Adobe CEO Shantanu Narayen.

The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity."