Global electronic design automation (EDA) and silicon IP giant Synopsys has submitted an offer to acquire Ansys, a $30 billion engineering software provider, according to sources familiar with the matter cited by Reuters, the Wall Street Journal and others. The acquisition, if successful, would not only create a new design software giant, but would also be one of the first major mergers and acquisitions in the semiconductor industry in 2024.

The deal talks come as Synopsys co-founder Aart de Geus prepares to transition into the role of executive chairman and transfer CEO powers to Chief Operating Officer Sassine Ghazi on January 1, 2024.

Ansys and Synopsys formed a partnership in 2017 to integrate each other’s technologies, with the goal of helping the two companies’ overlapping customers use their products more effectively. Synopsys’ pursuit of transformative acquisitions amid leadership changes underscores the commercial appeal of Ansys software, which is widely used in design, including rackets for high-profile players in tennis.

Synopsys is one of the companies that has been in talks with Ansys about a potential deal, and Ansys has attracted other suitors, but there is no certainty that Synopsys’ bid will win, the sources said.

Mergers between giants and giants

Synopsys is based in Sunnyvale, California, and has a market capitalization of $85 billion. Synopsys has gained more than 70 percent this year as investors have piled into AI-related stocks.

In terms of market position, the EDA market share of Sinesco Technology jumped from 41.2% in 2021 to 45.8% in 2022. In addition to the continuous evolution of products and technologies, DSO.ai (bringing AI into the design process to find the best potential solutions) was also adopted by ST Semiconductor (STM) and SK Hynix, further consolidating its position as the leader. In addition, Synovate ranked second in the world in IP market share (about 20% in 2022), second only to Arm (about 41% in 2022), but ranked first in interface IP, memory IP, analog IP and physical IP.

Ansys, founded in 1970, is a simulation software manufacturer headquartered in Canonsburg, Pennsylvania. Its main business is developing simulation software that helps predict how products will behave in real life, and it is also the world’s largest maker of computer-aided engineering (CAE) software.
CAE software is mainly used for simulation analysis, which is essentially a computer program solidified by algebraic solution process obtained after mathematical treatment of theoretical models of physics and engineering disciplines, and includes rich engineering data, models, simple and easy to operate user interface and result analysis functions. As a comprehensive, knowledge-intensive information product, CAE integrates algorithms and technologies of physics, mathematics, engineering, computer science and other disciplines, involving a wide range of disciplines and complex models, requiring a deep theoretical foundation and continuous technological innovation.

According to the Ansys website, engineers use its structural analysis software before a project starts to reduce manufacturing costs, reduce risk and get products to market faster. Its software is used by companies in the aerospace, automotive and industrial industries.

In terms of EDA market position, Ansys is second only to the first echelon of the big three

According to the financial report, Ansys achieved a total operating revenue of 2.066 billion US dollars in fiscal year 2022, an increase of 8.33%, and a net profit of 524 million US dollars, an increase of 15.20%. The compound growth rate of the company’s total revenue and net profit from 2013 to 2022 was 10.21% and 8.81% respectively. In the first three quarters of 2023, the company achieved total revenue of 1.465 billion US dollars, an increase of 6.81% over the same period last year, and the company’s overall business maintained a stable growth trend.

Ansys shares are up nearly 40% this year and it now has a market value of nearly $30 billion. But the sources said Ansys received an offer well above $400 per share, and a deal could be announced in the coming weeks if negotiations go well.

In response to the rumors, an Ansys spokesperson said in an emailed statement: “M&A rumors are not unusual in our industry, and it is our longstanding policy not to comment on these rumors.”