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Chip design toolmaker Synopsys has agreed to buy engineering software maker Ansys in a $35bn cash-and-stock deal, the latest sign of an upturn in tech dealmaking activity after a protracted lull.
Synopsys and Ansys said on Tuesday that their tie-up would meet customers’ desire for a “fusion of electronics and physics”, as chipmakers sought to design larger appliances while manufacturers of cars, aircraft and industrial equipment saw a growing role for semiconductors in their products.
The transaction values Ansys at about $390 a share, based on Synopsys’s share price of $559.96 on December 21, the last trading day before news of a potential deal leaked, or around $35bn on an enterprise value basis.
Sassine Ghazi, Synopsys chief executive, said Ansys had a much larger customer base than his own company. This gave scope to increase their potential market with a “silicon-to-systems” product set and to boost margins.
“Our solutions are very complementary; we don’t have a lot of overlap,” he said, adding that this should make it easier to obtain regulatory approval than some other larger tech deals that have faced lengthy legal challenges.
Tech mergers and acquisitions fell sharply in 2023, amid heightened antitrust scrutiny for Big Tech companies and falling start-up valuations. But in recent months there has been a trickle of big-ticket deals in enterprise technology, including Cisco’s move to acquire data and security software company Splunk for $28bn in September and Hewlett Packard Enterprise’s $14bn bid for Juniper Networks, announced last week.
Shares in Synopsys, which have climbed more than 50 per cent over the past 12 months, picked up about 3 per cent after the deal was announced on Tuesday. Ansys stock, which had risen more than 25 per cent in the past year, fell 5 per cent on Tuesday to around $328.
The two companies are expected to report combined revenues of about $8bn for 2023 and have worked together as partners for seven years.
Silicon Valley-based Synopsys’s software tools and intellectual property are used by chipmakers including Nvidia and Intel to help design and test their processors. The semiconductor designer has grown in recent years as Big Tech companies including Microsoft, Google, Meta and Amazon strive to create more of their own chips, in particular to handle artificial intelligence systems in the cloud.
Ansys, which has headquarters in Pennsylvania and has its origins in structural analysis tools, makes engineering simulation software used in industries from automotive and construction to healthcare and defence.
