Chip design software maker Synopsys emerged as the winning bidder for Ansys on Tuesday, three weeks after the engineering simulation software company became a takeover target. SNPS stock rose on the news.
Sunnyvale, Calif.-based Synopsys agreed to pay Ansys shareholders $197 in cash and a 0.345 share of Synopsys common stock for each Ansys share. The transaction, worth about $35 billion, is the biggest technology deal of 2024 so far.
Cadence Design Systems and Siemens reportedly also made bids for Ansys.
The deal will combine Synopsys' semiconductor electronic design automation technology with Ansys' simulation and analysis portfolio to create a leader in silicon-to-systems design solutions, the companies said in a news release.
SNPS Stock Rises After Deal
On the stock market today, SNPS stock advanced 3.1% to close at 509.68. Ansys stock sank 5.5% to 327.42, even though the cash-and-stock deal valued Ansys at about $370 a share.
"We see this as an attractive offer for Ansys shareholders, considering the upside premium, as well as potential strong growth for the combined company to be able to deliver a comprehensive silicon-to-systems portfolio of solutions to their customers," CFRA Research analyst Janice Quek said in a client note.
The deal will expand Synopsys' total addressable market by 50% to about $28 billion. Synopsys expects the transaction to be accretive to adjusted earnings within the second full year post-close "and substantially accretive thereafter."
"It's a very compelling strategic and financial transaction," Synopsys Chief Financial Officer Shelagh Glaser told Investor's Business Daily.
The combination of the two companies will merge the digital and physical aspects of the product design process, she said. The fusion of those tools will be a boon to design productivity, Glaser said.
"Megatrends like AI are driving an enormous explosion of design activity," Glaser said. The acquisition also will give Synopsys greater exposure to the automotive market, she said.
SNPS Stock Is A Long-Term Leader
The deal will require regulatory approvals, but Synopsys expects to complete it in the first half of 2025.
"This is the logical next step for our successful, seven-year partnership with Ansys," Synopsys Chief Executive Sassine Ghazi said in a written statement.
He added, "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."
Synopsys ranks fourth out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. SNPS stock has an IBD Composite Rating of 94 out of 99.
SNPS stock is on the IBD Long-Term Leaders and Tech Leaders lists.
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