What Does the Approval Mean for the Deal?
The European Commission (EC) has officially approved Synopsys’ acquisition of Ansys, worth $35 billion. This green light comes after the two companies agreed to divest several software assets to address competition concerns. The decision is a significant step in the acquisition process, though other regulatory bodies are still reviewing the deal.
Why Did the European Commission Approve the Acquisition?
The EC concluded that while Synopsys and Ansys’ operations are largely complementary, there were potential issues related to competition in specific software markets. The commission was particularly concerned about the optics software, photonics software, and register-transfer-level (RTL) power consumption analysis software markets. However, with the divestiture of key assets, including Synopsys’ Optical Solutions Group and Ansys’ PowerArtist, the commission believes that competition will remain strong, benefiting customers and preserving innovation.
What Assets Are Being Divested?
As part of the agreement to satisfy regulatory concerns, Synopsys will sell its Optical Solutions Group to Keysight, alongside several optics and photonics software offerings such as Code V, LightTools, LucidShape, RSoft, and ImSym. On the other hand, Ansys will offload its RTL power consumption analysis software, PowerArtist.
This divestiture aims to address potential market concentration and ensure that customers have access to a variety of innovative software tools at competitive prices. According to Teresa Ribera, EC’s executive vice president of clean, just, and competitive transition, the divestments will prevent any harmful reduction in competition, particularly in sectors crucial for chip design and power efficiency.
Synopsys and Ansys: A Growing Partnership
Synopsys and Ansys have been collaborators since 2017, and this acquisition represents a natural extension of their longstanding partnership. The acquisition deal, announced in January 2024, signals a strategic move to expand Synopsys’ capabilities in engineering and product design software.
However, the merger raised concerns among regulators about its potential impact on competition, leading to investigations by the EC, the UK’s Competition and Markets Authority (CMA), and the Federal Trade Commission (FTC) in the US. Despite these concerns, the European Commission’s approval provides a significant boost to the deal.
What’s Next for the Acquisition?
As of now, the European Commission is the only regulatory body that has approved the deal. The UK’s CMA and the FTC continue to review the divestment conditions, with the CMA particularly focused on how the changes impact competition. The CMA’s investigation, which started in August 2024, is still ongoing, though the body has signaled that the undertakings proposed by Synopsys and Ansys might be accepted under the Enterprise Act 2002.
Synopsys remains confident that the deal will receive final approval from all relevant authorities and expects to close the transaction in the first half of 2025.
Potential Impact on the Market and Industry
The merger between Synopsys and Ansys comes at a time when the demand for advanced software tools in chip design is rapidly increasing. These tools help engineers create more energy-efficient chips, which is becoming ever more important in today’s technology-driven world. By combining their strengths, the two companies hope to push the boundaries of innovation in this space.
Through this acquisition, Synopsys aims to enhance its product offering in the engineering design space, particularly in areas related to optics and power consumption. The divestitures planned as part of the deal are designed to minimize the risk of reducing market competition and promote a healthier, more dynamic environment for customers and developers.
Frequently Asked Questions
1. What does the $35 billion Synopsys and Ansys acquisition entail?
The acquisition involves Synopsys purchasing Ansys to combine their engineering and product design software capabilities. This deal is valued at $35 billion and aims to enhance the companies’ positions in the chip design and simulation markets.
2. Why is Synopsys selling its software assets?
Synopsys agreed to divest its Optical Solutions Group and other optics-related software tools as part of a remedy to alleviate concerns about reduced competition in certain markets, particularly in optics software and photonics.
3. Will the acquisition affect the availability of software tools for chip designers?
The divestments ensure that competition remains healthy, meaning chip designers will continue to have access to a variety of software tools to improve power efficiency and design innovations.
4. What is the status of regulatory approval in the US and UK?
The European Commission has approved the deal, while the UK’s Competition and Markets Authority (CMA) and the US Federal Trade Commission (FTC) are still reviewing the proposed remedies. The CMA has provisionally accepted the divestment plans.
5. When will Synopsys complete its acquisition of Ansys?
Synopsys expects to complete the acquisition in the first half of 2025, assuming all regulatory approvals are finalized.
