Chip design firm Synopsys has announced its agreement to acquire simulation and analysis company Ansys in a landmark deal valued at $35 billion.
This acquisition marks a significant pivot in the tech industry, especially as semiconductor and system companies grapple with the slowdown of Moore’s Law, a prediction made in 1965 by Intel co-founder Gordon Moore regarding the doubling of chip components every few years.
Following the announcement, Synopsys shares rose by 2.8%, while Ansys experienced a 5% decline.
By merging Synopsys' expertise in semiconductor electronic design automation (EDA) with Ansys' comprehensive simulation and analysis capabilities, this acquisition creates a formidable force in silicon-to-systems design solutions.
As per the terms of the deal, Ansys shareholders will receive $197.00 in cash and 0.3450 shares of Synopsys common stock for each Ansys share, reflecting a significant premium with an enterprise value of $35 billion based on Synopsys' stock closing price on December 21, 2023.
The integration of these two industry leaders aims to meet the surging demand for a combination of electronics and physics, enhanced by artificial intelligence (AI). By fusing Synopsys' EDA technology with Ansys' simulation capabilities, the goal is to deliver a robust, integrated approach to innovation amidst increasing systemic complexity fueled by AI, silicon advancement, and software-defined systems.
Kevin Krewell, analyst at Tirias Research, noted, “It’s a bold move. The existing strategic partnership highlights their commitment to collaboration. Advanced simulation complements chip design, especially as we transition to chiplets. It will be interesting to see what government reviews reveal.”
Mario Morales, chip analyst at IDC, remarked, “The premium is notable, and strategically, it makes sense as Synopsys and the EDA industry aim to broaden their reach in addressing AI, design, and IP needs across diverse cloud platforms. This acquisition positions Synopsys for faster growth than the broader semiconductor market over the next five to seven years.”
Patrick Moorhead, analyst at Moor Insights & Strategies, added, “While the acquisition cost is substantial, Synopsys expects it to be accretive within a year, which is promising. The integration of chip design and system design tools will enable clients to simulate everything from chiplets to datacenters, leading to optimized designs, reduced costs, and energy efficiency.”
Sassine Ghazi, CEO of Synopsys, expressed, “Combining our industry-leading EDA solutions with Ansys’ simulation expertise will provide a cohesive and powerful approach to innovation from silicon to systems.”
Additionally, Ansys is collaborating with Nvidia to enhance sensor technology for self-driving cars.
The acquisition is projected to strengthen Synopsys' silicon-to-systems strategy, enhancing core EDA as well as expanding into attractive sectors such as automotive, aerospace, and industrial applications, where Ansys has established success.
Aart de Geus, executive chair and founder of Synopsys, stated, “This strategic partnership with Ansys is a valuable move for our company and shareholders, benefiting the innovative customers we serve.”
For over 50 years, Ansys has empowered clients to design advanced products with simulation technology. Ansys CEO Ajei Gopal noted, “The combined company will expedite the development of our joint portfolio and drive heightened innovation.”
Synopsys expects the acquisition to enhance its total addressable market (TAM) by 1.5 times, reaching approximately $28 billion with an estimated 11% compound annual growth rate (CAGR). The company anticipates that the deal will positively affect non-GAAP earnings per share within two years of closing and significantly thereafter.
The transaction is pending approval from Ansys shareholders, regulatory bodies, and other customary conditions, with an expected closure in the first half of 2025.
This strategic acquisition underscores the ongoing consolidation trend in the technology sector, as companies aim to bolster their positions by merging complementary capabilities to effectively address evolving industry challenges.
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