Cadence Design Systems Inc, the world’s biggest developer of chip design systems, is set to pay $260m in cash for privately held Ambit Design Systems Inc, a developer of logic synthesis tools for system-on-a-chip devices. The price tag is substantial considering Ambit, with its 100 employees, has projected revenues for 1998 of just $25m ($10m in 1997). But Ambit’s sole product, BuildGates (no pun intended?) has only been on sale for just over a year, and is viewed by Cadence as essential to its ambitions in the system-on-a-chip (SOC) market, defined by the extremely high number of transistors on a single chip, which typically runs into the millions. Cadence said it considered the price to be normal for this industry, Leading edge technology will always have a higher price tag, a spokesperson said. Cadence sells its design systems to many of the world’s major semiconductor manufacturers. Rumors of the deal first surfaced last month (CI No 3,483) and Cadence has been working closely with Ambit since signing an OEM agreement for BuildGates nine months ago. Prior to this, Cadence was still offering customers its internally developed ‘Synergy’ product which was several years old and which CEO Jack Harding described as having hit the wall. Cadence said it had offered to buy Ambit in order to facilitate integration between Ambit’s front end design tools and Cadence’s back end, place and route tools. Harding described it as bringing together the two solar systems of front end and back end design processes. Cadence said it had paid cash in the deal because it currently views its shares as being undervalued by the market. Ambit expects the majority of its employees to transfer across to Cadence, and the two are working on incentives to tie in the critical employees. Cadence is headquartered in San Jose while Ambit is close by in Santa Clara. The deal has been approved by the boards of both companies and now awaits both regulatory approval and the go- ahead from Ambit’s shareholders, which include substantial venture capital interests.
