The terms of the merger, agreed to by both boards, offer Macromedia holders 0.69 Adobe share for each Macromedia share, or about $41.86 in stock at Friday's closing prices. Adobe holders will own 82% of the combined company.
The software companies said their combination will create a publishing software juggernaut with greater access to growth markets. Adobe makes Acrobat and Photoshop, while Macromedia makes Dreamweaver.
"Customers are calling for integrated software solutions that enable them to create, manage and deliver a wide range of compelling content and applications -- from documents and images to audio and video," Adobe CEO Bruce Chizen said. "By combining our powerful development, authoring and collaboration software -- along with the complementary functionality of PDF and Flash -- Adobe has the opportunity to bring this vision to life with an industry-defining technology platform."
Chizen will remain as chief executive of the combined company and Adobe's Shantanu Narayenb will continue as president and chief operating officer. Macromedia CEO Stephen Elop will join Adobe as president of worldwide field operations.
Adobe also set a $1 billion postdeal buyback plan and guided toward the high end of its second-quarter guidance, which calls for earnings of 51-55 cents a share on revenue of $475 million to $495 million.
Early Monday, Adobe slipped 5% and Macromedia added 17%.