Synopsys, a US chip design software firm, is nearing conditional antitrust approval from the European Union (EU) for its previously announced $35bn acquisition of engineering simulation software company Ansys, reported Reuters citing sources privy to the matter. The deal has faced scrutiny from multiple regulators over its potential impact on competition and innovation.
Proposed remedies to address EU concerns
Sources indicate that Synopsys has proposed significant remedies to address EU concerns, including the divestiture of its Optical Solutions Group and Ansys PowerArtist, a tool designed to analyse and reduce chip power consumption. These measures aim to ease fears that the merger could limit competition and lead to higher prices. In line with this, Synopsys announced a definitive agreement to sell OSG to Keysight Technologies in September this year. The European Commission (EC) is expected to conclude its preliminary review of the acquisition by 10 January 2025.
The UK’s Competition and Markets Authority (CMA) has also raised concerns about the merger. In August, the CMA launched an inquiry to determine whether the acquisition could create a “relevant merger situation” under the Enterprise Act 2002. Last week, the CMA stated that while Synopsys and Ansys largely operate in complementary markets, the merger could reduce competition in three critical areas where the companies overlap. The identified concerns include global register transfer level power consumption analysis tools, such as Ansys PowerArtist, which are essential for designing energy-efficient chips. Other areas of concern are global optics software, used in light-based product design, and global photonics software, vital for modelling and communication systems based on light technologies.
The British competition watchdog stated that it would consider approving the deal if Synopsys presents viable solutions to resolve these competition issues. Without satisfactory remedies, the regulator could escalate its review to a Phase 2 probe, requiring a deeper examination of the potential market impact. Synopsys is expected to offer similar remedies to the CMA as those proposed to the EU regulators.
Synopsys and Ansys formalised their acquisition agreement earlier this year, with the transaction structured to provide Ansys shareholders $197 in cash and 0.3450 shares of Synopsys common stock for each Ansys share. The companies have framed the merger as a step toward creating a leader in integrated design solutions, combining Synopsys’ expertise in semiconductor electronic design automation (EDA) with Ansys’ simulation tools, which are widely used in sectors ranging from aerospace to consumer goods.
In addition, the acquisition is anticipated to bolster Synopsys’ silicon-to-systems strategy, enhancing its core EDA capabilities while expanding into high-growth sectors such as automotive, aerospace, and industrial markets. The combined company is projected to realise approximately $400m in annual cost synergies within three years of the deal’s completion, along with an equivalent amount in annual revenue synergies by the fourth-year post-closing. The transaction remains subject to approval by Ansys’ shareholders, regulatory clearances, and other customary conditions. If approved, the merger is expected to be finalised in the first half of 2025.
Read more: UK CMA to probe Synopsys’ $35bn acquisition of Ansys
