Adobe and Figma, the cloud-based design tool, will terminate their planned $20 billion merger in light of regulatory hurdles, the companies said Monday.

In a statement, the two companies said "there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority."

Adobe shares rose around 1.8% on the news in pre-market trading Monday.

"Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently," Shantanu Narayen, CEO of Adobe, wrote in a statement. "While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences."

Adobe will pay Figma a $1 billion breakup fee, Adobe said in a regulatory filing.

The news is a sudden pivot from Narayen's latest talking points, as he told CNBC Wednesday that the company believes in the acquisition and its benefits for consumers.

"We want to take the ability for what Figma has done with respect to creative collaborative software on the web, combine that with what Adobe has done in our creative, and make it even more accessible for others," Narayen told CNBC's Jim Cramer. "We think it's an adjacency, we really believe in our merits of the case, but the regulatory environment is challenging."

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