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Synopsys Inc. today said it will acquire Ansys Inc. for about $35 billion to combine Ansys’ simulation and analysis portfolio with its semiconductor electronic design automation, or EDA. The companies claimed this will “create a leader in silicon to systems design solutions.”
“The megatrends of AI, silicon proliferation, and software-defined systems are requiring more compute performance and efficiency in the face of growing, systemic complexity,” said Sassine Ghazi, president and CEO of Synopsys, in a release.
“Bringing together Synopsys’ industry-leading EDA solutions with Ansys’ world-class simulation and analysis capabilities will enable us to deliver a holistic, powerful, and seamlessly integrated silicon-to-systems approach to innovation to help maximize the capabilities of technology R&D teams across a broad range of industries.” he added. “This is the logical next step for our successful, seven-year partnership with Ansys.”
Synopsys provides tools and services for electronic design automation (EDA), semiconductor intellectual property (IP) integration, application security, and quality testing. The Sunnyvale, Calif.-based S&P 500 company claimed that its technologies enable innovations including autonomous vehicles, smart machines, and high-quality code and communications.
Ansys to add simulation to Synopsys testing
“For more than 50 years, Ansys has enabled customers to design, develop, and deliver cutting-edge products that are limited only by imagination,” stated 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.”
“The combined company will accelerate the development of our joint portfolio and deliver an increased level of innovation, which will benefit Ansys’ traditional customers,” he said.
Canonsburg, Pa.-based Ansys said its simulation software helps predict the performance of systems ranging from advanced semiconductors to sustainable transportation, satellite systems, and medical devices. It recently partnered with NVIDIA to test sensors for autonomous vehicles.
“At least once a year since 2000, Ansys has acquired and/or announced a major technology sharing partnership with another company,” wrote Shawn Wasserman, a former Ansys employee, on Engineering.com, a sibling site to The Robot Report. “Today, however, the script has been flipped.”
Companies combine complementary capabilities
“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, founder and executive chair of Synopsys. “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 trends towards electrification, smart devices, AI, and larger computational resources are all cited as major factors bringing Ansys and Synopsys together,” said Wasserman. “All these trends will lead to more complex products and complicated development. In essence, everything will become more complex as mechanical and electrical tools combine in more innovative ways.”
Synopsys and Ansys said their combination will offer the following benefits:
- Combining capabilities to meet customer demand: “The complexity of today’s intelligent systems demands the integration of semiconductor design and simulation and analysis to ensure interconnected systems function properly in real-world settings,” said Synopsys. It said innovators in the semiconductor industry and beyond will be able to benefit from the combination of Ansys’ simulation and analysis capabilities with its EDA technology.
- Accelerates strategy and growth in adjacent areas: Synopsys said the combination will enhance its silicon-to-systems strategy both across the core EDA segment and in markets such as automotive and aerospace, where Ansys has an established presence and go-to-market experience.
- Complementary fit: Synopsys and Ansys have collaborated since 2017, and they said an integrated suite of software tools will help customers solve their most difficult design challenges. They can also gain valuable insights through model-based analysis of complex systems, the partners said.
- Expands total addressable market: Synopsys said the deal will increase its total addressable market (TAM) by 1.5x to approximately $28 billion. This combined TAM could expand at a 11% compound annual growth rate (CAGR), driven by trends such as automation accelerating the need for the fusion of electronics and physics across industries, it said.
“Currently, the duo offers engineers multiphysics design tools for the development of products from chips and systems via Ansys RedHawk-SC and Synopsys’ Fusion Compiler, 3DIC Compiler and PrimeTime signoff Platforms,” Wasserman explained. “The linking of these tools helps engineers find design weaknesses early, perform in-design analysis, optimize voltage timing, ensure thermal reliability and perform final sign off on advanced SoCs, 2.5D and 3DIC.”
“For a use case example, an engineer can use Ansys RedHawk-SC Electrothermal analysis to assess the electrical and thermal interactions of a 2.5D or 3DIC system,” he said. “Synopsys’ 3DIC Compiler can then assess system integrations and end-to-end heterogeneous implementations for 2.5 or 3DIC multi-die and multi-node designs. In other words, engineers can perform multiphysics signoff all the way down to the transistor level and all the way up to a full system analysis.”
Synopsys expects to quickly pay down debt
Under the terms of a definitive agreement, Ansys shareholders will receive $197 in cash and 0.345 shares of Synopsys common stock for each Ansys share. This represents an enterprise value of approximately $35 billion based on the closing price of Synopsys common stock on Dec. 21, 2023.
The implied per share consideration of $390.19, based on the closing price of Synopsys common stock of $559.96 as of Dec. 21. Synopsys said this is a premium of about 29% over Ansys’ closing stock price and approximately 35% to Ansys’ 60-day volume-weighted average price for the period ending on the same date. Under the terms of the agreement, Ansys shareholders would own 16.5% of the combined company on a pro forma basis.
Synopsys added that it plans to fund the $19 billion of cash consideration through a combination of its cash on hand and $16 billion it has obtained in fully committed debt financing. The company said it expects the acquisition to help it continue double-digit growth, which it said should outplace TAM market growth.
In addition, Synopsys said the combined company will generate enough cash flow to enable rapid de-leveraging of its debt and to deliver as much as $400 million in cost and revenue synergies by the fourth year after closing. The companies said they expect the transaction to close in the first half of 2025, subject to approval by Ansys shareholders, the receipt of required regulatory approvals, and other customary closing conditions.
Evercore is serving as financial advisor to Synopsys, and Cleary Gottlieb Steen & Hamilton LLP is serving as legal advisor. Qatalyst Partners LP is serving as financial advisor to Ansys, and Skadden, Arps, Slate, Meagher & Flom LLP and Goodwin Procter LLP are serving as legal advisors.