In a significant move within the tech industry, Synopsys, a major player in electronic design automation, has made a bold step by agreeing to purchase Ansys, a company known for its engineering simulation software, in a deal valued at $35 billion. This acquisition is set to create a powerhouse by combining Synopsys’ expertise in design tools with Ansys’ simulation prowess, potentially leading to faster innovation and growth in various sectors that rely heavily on complex electronic systems.
For those holding Ansys shares, the deal terms are quite attractive. Shareholders are set to receive $197.00 in cash and a fraction of Synopsys stock for each share of Ansys they own. This offer not only provides a premium over the current market value of Ansys shares but also highlights the value that Ansys’ technology brings to Synopsys’ future.
The merger is expected to create a dominant force in the EDA and simulation markets. By bringing together the strengths of both companies, the design process from the smallest silicon components to entire systems could become more streamlined. This is particularly important for industries like automotive, aerospace, and industrial manufacturing, where the demand for sophisticated electronic systems is growing rapidly.
Synopsys to acquire Ansys
Synopsys is set to broaden its market influence by adding Ansys’ simulation tools to its portfolio. This strategic move is timely, as electronic systems are becoming more integral to technological advancements. By expanding into new markets, Synopsys aims to grow beyond its foundational EDA solutions.
Founder of Synopsys
“Since inception 37 years ago, Synopsys has been an innovation pioneer, central to world-changing semiconductor advances in computation, networking, and mobility, and now enabling the new era of ‘pervasive intelligence’,” said Aart de Geus, Executive Chair and Founder of Synopsys. “Joining forces with Ansys, a company we know well from our long-standing partnership, is the latest example of how Synopsys remains at the forefront. Our Board and management team carefully evaluated our top strategic options to lead and win in this fast-growing new wave of electronics and system design. The technology-broadening team-up with Ansys is an ideal, value-enhancing step for our company, our shareholders, and the innovative customers we serve.”
From a financial perspective, the acquisition looks promising for Synopsys. It is expected to improve key financial metrics, such as non-GAAP operating margin and free cash flow margins. Moreover, the deal is predicted to increase non-GAAP earnings per share, which could signal higher profitability and attract investor interest.
The companies anticipate that the merger will generate significant cost and revenue synergies, estimated at around $400 million annually within three to four years after the deal closes. These synergies are likely to come from increased operational efficiencies and the ability to offer more competitive products.
CEO of Ansys
“For more than 50 years, Ansys has enabled customers to design, develop and deliver cutting-edge products that are limited only by imagination. By joining forces with Synopsys, we will amplify our joint efforts to drive new levels of customer innovation,” said Ajei Gopal, President and CEO of Ansys. “This transformative combination brings together each company’s highly complementary capabilities to meet the evolving needs of today’s engineers and give them unprecedented insight into the performance of their products.
Ansys has a strong foundation, as demonstrated by preliminary annual contract value (“ACV”) results for Q4 that are expected to exceed the high end of our guidance, and I am confident that building on our partnership with Synopsys will position us well to deliver even greater value for our customers, partners and shareholders.
The combined company will accelerate the development of our joint portfolio and deliver an increased level of innovation, which will benefit Ansys’ traditional customers. I am proud of all that our employees do every day to make Ansys and our customers successful and look forward to the combined company achieving even greater heights in this next chapter.”
To finance the cash portion of the acquisition, Synopsys plans to use its available cash and secure $16 billion in debt financing. This approach aims to maintain the company’s financial flexibility while undertaking this substantial purchase.
However, the acquisition is not yet a done deal. It is subject to approval from Ansys shareholders, regulatory clearances, and other customary closing conditions. If all goes as planned, the transaction is expected to be completed in the first half of 2025, marking a significant milestone for both companies and their stakeholders.
The tech industry is constantly evolving, and this merger could set a new standard for how companies address the challenges of designing and analyzing modern electronic systems. The combined capabilities of Synopsys and Ansys could lead to enhanced product offerings, increased market presence, and improved financial health, all of which are crucial as the demand for advanced electronic systems continues to rise.
Filed Under: Technology News, Top News
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