Synopsys, a developer of chip design software, announced the acquisition of Ansys, a maker of software that is used to create a variety of products, including tennis rackets and airplanes.
In this case, the deal worth $35 billion will be implemented. Synopsys plans to pay the mentioned amount in cash and shares.
The deal will be the largest acquisition in the technology sector since chipmaker Broadcom took over software developer VMware last November. The value of this business agreement was $69 billion.
There is a possibility that the acquisition of Ansys by Synopsys could be a kind of catalyst for other large deals. This example can improve the economic mood and make a more optimistic assessment of the prospects for appropriate solutions. At the same time, attempts by some regulators to prevent such business agreements remain a negative influence factor in this case.
The deal, which Ansys and Synopsys plan to implement, provides for the value of one share for $390.19 and a premium of about 29% over Ansys’ last close on December 21. This business agreement will create a new major player in the sphere of business software development, within which there is already a high level of consolidation. According to Wells Fargo experts, the mentioned state of affairs creates a situation of regulatory uncertainty.
After the news of the deal appeared, the share price of Synopsys increased by 3.8%, reaching $513. Ansys securities have demonstrated the opposite dynamic. The share price of this company fell by 4.8% to $329.86.
The Synopsys and Ansys merger comes at a time when major players in the chip manufacturing industry, such as Nvidia and Intel, are developing more complex microcircuits consisting of many parts and are working to create massive computing systems that use the specified products.
Synopsys specializes in making tools for chip design. Anysys develops software for evaluating larger electronic systems that use microcircuits.
Synopsys CEO Sassine Ghazi, during a conversation with media representatives, said that currently Silicon Valley companies have limited ability to continue to innovate due to the lack of an integrated solution, a request for which has already been formed in the market.
The media first reported that Synopsys was in talks to acquire Ansys in December. At that time, insiders said that Ansys began to explore the possibility of a sale after the corresponding interest was demonstrated by the software developer Cadence Design Systems.
Two weeks ago, Synopsys co-founder and executive chairman Aart de Geus handed over to Sassin Gazi. The desire to implement the deal during the period of leadership change is a kind of evidence of the high level of commercial interest in the Ansys software. The company’s products are used by engineers, designers, and researchers in industries such as defense, aerospace, energy, and automotive. The software is necessary for the analysis of goods. Ansys competes with companies such as Autodesk, Fusion 360, AutoCAD, Dassault Systemes, and Solidworks.
Synopsys cooperates with chip manufacturers, including AMD, Intel, and Nvidia. The company also benefited from the aspirations of Microsoft and Google to independently develop microcircuits.
The deal will combine Synopsys semiconductor electronics design automation tools with the Ansys portfolio for modeling and analysis. This business agreement may provoke regulatory scrutiny, especially in China, where the relevant procedures have become more complicated.
Sassinu Ghazi and Ansys CEO Ajei Gopal told the media that the boards of directors of both companies have hired independent consultants to assess the risks associated with regulation. Mr. Ghazi also said that the deal should be completed in the first half of 2025. At the same time, he noted that the companies have set a deadline of 24 months to achieve the corresponding goal.
Synopsys and Ansys started collaborating in 2017. The share price of these companies has grown significantly amid the boom in artificial intelligence. The deal is expected to increase Synopsys’ adjusted earnings during the second full year after closing and grow substantially going forward.
If this business arrangement is not implemented for certain reasons, including due to antitrust obstacles, Synopsys will have to pay a termination penalty of $ 1.5 billion.
If the deal is not implemented due to the Ansys decision, including against the background of a more favorable offer, the payout amount will be $950 million.
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