Adobe buying Omniture for $1.8 billion

NEW YORK (CNNMoney.com) -- Adobe Systems went shopping on Tuesday. And it came home with a pricey find.

The software company said it is buying Web analytics firm Omniture for about $1.8 billion in an effort to make itself more competitive in the world of online commerce.

The maker Photoshop and Acrobat products said it will offer Omniture $21.50 per share in cash. That's a 24% premium to Omniture's Tuesday closing price of $17.32 per share. The deal is expected to close in the fourth quarter of Adobe's fiscal year.

Omniture (OMTR), which is based in Orem, Utah, helps clients, including CNNMoney.com, understand how visitors traffic their Web sites and assists online businesses to target advertisements.

Adobe, which is based in San Jose, Calif. said the deal will help it "transform" e-commerce by combining its content creation tools with Omniture's online measurement and optimization technologies to help "increase the value Adobe delivers to customers."

"This is a game changer for Adobe and its customers," said Shantanu Narayen, chief executive of Adobe, in a statement. "We will enable advertisers, media companies and e-tailers to realize the full value of their digital assets."

Adobe said Omniture will become a new business unit within the company and that Josh James, Omniture's chief executive, will be put in charge of it as a senior vice president.

James said the combination of the two companies will allow for new strategies to improve "content engagement, advertising effectiveness and the overall user experience." That, he added, "will drive more advertising dollars online."

Trip Chowdhry, managing director of equity research at Global Equities Research, agreed that the acquisition is a "smart move" on Adobe's part because it may help offset declining revenues from the company's Creative Suite of software. However, he believes Adobe overpaid for Omniture because the company is losing market share to rival Google Analytics.

Also on Tuesday Adobe reported that it earned $136 million, or 26 cents per share, in the quarter ended Aug. 28. That's down from net income of $191.6 million, or 36 cents per share, a year ago.

Excluding certain items, Adobe said it earned 35 cents per share. Analysts surveyed by Thomson had forecast earnings per share of 34 cents.

Adobe (ADBE) shares fell to $34.26 in extended trading after closing at $35.19 in active New York trading.