Synopsys closes a $35 billion deal to buy Ansys
Synopsys, a major Silicon Valley supplier to the chip industry, said Tuesday it had agreed to pay $35 billion for Ansys, a Pennsylvania company that makes software used to simulate and analyze product designs for electronics manufacturers, automakers, defense contractors and others. .
The deal, which was closed for a combination of cash and stock, follows a $14 billion deal this month by Hewlett Packard Enterprise to buy Juniper Networks, uniting a major computer manufacturer with a networking equipment specialist. It was the latest sign of changing times in the technology sector, which is dealing with sluggish sales of many types of hardware and a frenzy over artificial intelligence.
AI has led to high spending in data centers and has also led many large internet companies to start designing their own chips. Some automakers, which have become a major new source of demand for chips amid the push to electrify more vehicles and add driver assistance systems, are also designing their own chips.
Synopsys is a pioneer in software that simulates and verifies chip designs, gradually adding products to help design more complete electronic systems. It has been working with Ansys since 2017 to win more customers for such tasks.
Synopsys CEO Sassine Ghazi said the desire to buy Ansys was driven by the need to move even faster to deliver software that can simulate the electrical and physical interactions of multiple components in systems.
“The worlds of semiconductor design and physical simulation and analysis must come together,” he said in a conference call with analysts.
Mr Ghazi took over his title earlier this year from Aart de Geus, who co-founded Synopsys in 1986 and remains executive chairman.
His company's biggest rival for decades has been Cadence Design Systems, another Silicon Valley company. The Wall Street Journal previously reported talks between Synopsys and Ansys, saying Cadence's interest in Ansys helped make that company eligible for acquisition.
A spokesperson for Cadence declined to comment.
Ansys was founded in 1970 by John Swanson, a mechanical engineer who developed software for Westinghouse in the 1960s to help analyze stresses on nuclear reactors.
The company added other products over the years and became a major player in the engineering software field. Ajei Gopal, CEO since 2017, was previously an operating partner at Silver Lake, a private equity firm.
Synopsys said the payment to Ansys shareholders had an implied value of $390.19 per share, based on Synopsys' stock price on Dec. 21, the day before the Journal reported deal talks. That price represents a 35 percent premium over the average price of Ansys shares over the 60 days to that date, Synopsys said.
Some Synopsys shareholders opposed the deal, analysts said, in part because Ansys had recently reported slower revenue growth than Synopsys. But Synopsys predicted the combination would accelerate revenue growth and quickly start contributing to higher profits.
The companies predicted the deal would close in the first half of 2025.