Adobe has reached a definitive agreement to acquire Macromedia for $3.4 billion in stock, the company announced today.

The deal, which has been approved by both boards of directors, will see Macromedia shareholders receive 0.69 shares of Adobe common stock for each Macromedia share they hold, Adobe said in a statement. Based on Friday's closing prices, this values each Macromedia share at $41.86, considerably above the market value of $33.45.

The top two executives at Adobe will retain their positions once the acquisition has been completed, which is expected in the second half of the year. Bruce Chizen will remain its chief executive officer and Shantanu Narayen will remain president and chief operating officer. Macromedia's president and chief executive officer, Stephen Elop, will become president of worldwide field operations at Adobe.