Key Takeaways
- Chip design software maker Synopsys Inc. on Tuesday announced a cash-and-stock deal to acquire simulation software company Ansys Inc. that’s valued at $35 billion.
- The deal brings together Synopsys’ semiconductor electronic design automation (EDA) with longtime partner Ansys’ simulation technology.
- Synopsys said it plans to fund the bulk of the $19 billion cash portion of the deal with a debt offering.
- Synopsys stock rose about 1.5% in intraday trading Tuesday after the announcement.
Synopsys Inc. (SNPS) stock jumped early Tuesday after the company announced a cash-and-stock acquisition of Ansys Inc. (ANSS) after a seven-year relationship in semiconductor design and simulation between the two.
Ansys shareholders are set to receive $197 in cash and 0.345 share of Synopsys common stock for each Ansys share they hold, resulting in an enterprise value of around $35 billion. The deal represents a 35% premium over Ansys’ 60-day average price for the period ending Dec. 21, 2023. Synopsys announced that it will fund $19 billion of the deal with cash on hand and a $16 billion debt offering.
Synopsys and Ansys have worked as partners for seven years, combining Synopsys’s semiconductor electronic design automation (EDA) with Ansys’ simulation and analysis tools. The Wall Street Journal reported three weeks ago that the two firms were in merger talks.
Synopsys said the combined company’s total addressable market (TAM) will increase by 1.5 times to approximately $28 billion. Despite increasing its leverage to acquire Ansys, the company said that increased free cash flow will enable “rapid de-leveraging” to less than two times debt within two years. Run-rate cost savings of $400 million are also expected to be achieved by Year Three.
Synopsys President and Chief Executive Officer (CEO) Sassine Ghazi said the company was seeking to capitalize on the “megatrends of AI, silicon proliferation, and software-defined systems,” creating a research & development (R&D) powerhouse across a wide range of industries.
Synopsys shares rose as much as 4.6% before giving up some of those gains, and were trading 1.5% higher in the late afternoon. Ansys stock fell about 5%.