Adobe Systems Inc. has announced an agreement to purchase Macromedia for approximately $3.4Billion in stocks.

Adobe and Macromedia both make software for the creation of web documents. Adobe’s most famous product is the document security software Acrobat. It also makes the popular website editing software GoLive, and image editors Photoshop and Illustrator.

Macromedia creates the world’s most popular web editing software package, Dreamweaver. Marcomedia is also known for its web animation software, FLASH and database/website coding language Cold Fusion.

The purchase, which gives Adobe a firmer foothold in markets previously dominated by Microsoft, is seen by many as a direct challenge to Microsoft, especially in rapidly developing markets like China. It is also seen as a way to leapfrog Adobe ahead in the race to produce products for creating content for cell-phone displays.

The acquisition, which is expected to close in Fall 2005, is subject to customary closing conditions, including approval by the stockholders of both companies and regulatory approvals.