Synopsys to buy engineering software firm Ansys in $35 billion deal - ET Telecom
Summary
NEW YORK: Chip design software maker Synopsys said on Tuesday it would buy Ansys in a $35 billion cash-and-stock deal, snapping up the maker of software used in creating products from airplanes to tennis rackets of players like Novak Djokovic.The transaction would be the biggest acquisition in the technology sector since chipmaker Broadcom took over software maker VMware last November in a $69 billion deal.It could herald more big deals as a pickup in economic sentiment and some failed attempts by antitrust regulators to thwart deals embolden chief executives to place large acquisition bets.The deal implies a per-share value of $390.19 and represents a premium of about 29% over Ansys last close on Dec. 21, 2023, the companies said.The transaction will create a massive new player in a sector of the business software industry that is already highly consolidated, which Wells Fargo said in a note creates regulatory uncertainty. "Today, if you talk to a silicon company, their ability to continue on innovating ... is limited by not having a solution that is integrated," Synopsys CEO Sassine Ghazi told Reuters. Ansys started exploring a sale late last year after getting inbound acquisition interest from design software firm Cadence Design Systems, according to people familiar with the matter.The deal comes just two weeks after Synopsys co-founder and Executive Chairman Aart de Geus handed over the chief executive reins to Ghazi.The pursuit of such a transformative acquisition amid a leadership change underscores the commercial appeal of Ansys software.Ansys makes simulation software used by engineers, designers and researchers across industries like aerospace, defense, automotive and energy to help analyze products. The EDA industry is already highly consolidated between Synopsys and Cadence, both of which have similar market capitalizations.Though Anysys is not a direct competitor to either company, the deal could trigger regulatory scrutiny, especially key markets such as China, where approval times have become more difficult to predict.Ghazi and Ansys CEO Ajei Gopal told Reuters that the boards of both companies retained independent advisers to evaluate regulatory risks. "Both Synopsys and Ansys have seen their share price jump significantly over the past 12 months, amid an artificial intelligence boom.They began their partnership in 2017 to offer solutions to chip designers for analyzing chips for quality standards to make the overall designing process efficient.The transaction is expected to add to Synopsys adjusted earnings within the second full year post-closing and be "substantially" accretive thereafter.If the deal is called off under specific circumstances, including antitrust hurdles, Synopsys will have to pay Ansys a termination fee of $1.5 billion.If Ansys ends the deal to accept another, superior proposal, it will be required to pay the design software firm $950 million.
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