October 9, 2001
MACROMEDIA ACQUIRED BY REALNETWORKS IN $1.4 BILLION STOCK SWAP
Seattle-based Internet media service RealNetworks announced its acquisition of multimedia application developer Macromedia yesterday. The deal is expected to strengthen RealNetworks’ position in the online video market, with Macromedia’s Flash Player being the main competitor for playing video files from the Internet.
In a statement to shareholders of both companies, RealNetworks CEO Ron Glaser stated that he expects the buyout to create change in the video player market, speaking of the many innovations which have been made both companies. “The acquisition of Macromedia will allow us to further expand our online multimedia presence,” he said.
Glaser also added that he expects to integrate many of Macromedia’s products, including Shockwave and the aforementioned Flash, into Internet Explorer, which has been developed by RealNetworks ever since it was divested by Microsoft in order to appease antitrust concerns. Flash, which is primarily a tool for animations, is more versatile than RealPlayer and is used on many websites, so its integration into Explorer will give Explorer a further advantage over its competitors. Macromedia’s users are also expected to benefit from having access to a traditional media player in RealPlayer to complement the services used by Flash, and it is expected that future versions of both applications will combine some of their features.
In the combined company, Macromedia’s San Francisco offices are expected to remain, but will likely be downsized as many employees are brought up to Seattle in order to work on RealNetworks’ upcoming products. Macromedia’s CEO Rob Burgess will join RealNetworks’ board of directors along with retaining his duties at the Macromedia headquarters for the time being.
The market responded positively to the announcement, with RealNetworks’ stock price rising $9.02, or 9%, to $106.18, and Macromedia’s stock price rising $2.32, or 8%, to $31.91.