Synopsys to merge with Ansys, forging a dominant force in Silicon to Systems design

Synopsys and Ansys have announced a definitive agreement for Synopsys to acquire Ansys, creating a powerhouse in silicon to systems design solutions and expanding Synopsys' total addressable market by approximately 1.5 times.

The acquisition will bring together two industry leaders in semiconductor EDA and simulation and analysis, creating a powerhouse in silicon to systems design solutions.
The combined company will have a holistic, integrated approach to innovation, maximizing the potential of technology R&D teams across various industries.
The partnership accelerates Synopsys' growth strategy in attractive adjacent areas such as Automotive, Aerospace, and Industrial, expanding their total addressable market and projected growth.

In a major industry move, Synopsys and Ansys have announced their definitive agreement for Synopsys to acquire Ansys. The deal, valued at approximately $35 billion, will bring together Synopsys’ semiconductor electronic design automation (EDA) capabilities with Ansys’ simulation and analysis portfolio, creating a powerhouse in silicon to systems design solutions.

The convergence of artificial intelligence, the proliferation of silicon, and the rise of software-defined systems has led to a growing need for increased compute performance and efficiency in the face of mounting complexity. By joining forces, Synopsys and Ansys aim to deliver a holistic, integrated approach to innovation that maximizes the potential of technology R&D teams across various industries.

Sassine Ghazi, President and CEO of Synopsys, expressed his excitement about the partnership, stating that it is the logical next step in their successful seven-year collaboration with Ansys. He looks forward to working closely with Ajei Gopal, President and CEO of Ansys, and the talented Ansys team to deliver the benefits of this combination to customers, shareholders, and employees.

Aart de Geus, Executive Chair and Founder of Synopsys, highlighted Synopsys’ longstanding history of innovation in the semiconductor industry and its role in enabling the new era of “pervasive intelligence.” He sees the partnership with Ansys as a strategic move that positions Synopsys at the forefront of the fast-growing wave of electronics and system design.

Ajei Gopal, President and CEO of Ansys, emphasized the companies’ shared commitment to customer innovation. He believes that joining forces with Synopsys will amplify their efforts to drive new levels of customer value. The combined company aims to accelerate the development of their joint portfolio and deliver increased innovation that benefits both traditional Ansys customers and those in other industries.

The acquisition is driven by several compelling factors. Firstly, combining Synopsys’ EDA technology with Ansys’ simulation and analysis capabilities will provide customers with a comprehensive, system-focused approach to innovation. This integration is particularly crucial in today’s complex intelligent systems landscape.

Secondly, the partnership accelerates Synopsys’ growth strategy in attractive adjacent areas such as Automotive, Aerospace, and Industrial. Ansys’ established presence and successful go-to-market experience in these industries will enhance Synopsys’ Silicon to Systems strategy.

Thirdly, the two companies have a history of successful collaboration and a shared culture of integrity, execution excellence, and customer empowerment. Their complementary solutions are expected to provide customers with a broader suite of software tools to tackle their most challenging design problems.

The acquisition also significantly expands Synopsys’ total addressable market (TAM) by approximately 1.5 times, reaching around $28 billion. This expanded TAM is projected to grow at an 11% compound annual growth rate (CAGR), driven by the increasing fusion of electronics and physics across industries.

Financially, the combination is expected to strengthen Synopsys’ profile. The company anticipates maintaining its industry-leading double-digit growth, outpacing TAM growth. The transaction is projected to expand Synopsys’ non-GAAP operating margin by approximately 125 basis points and unlevered free cash flow margins by approximately 75 basis points in the first year following the closing. It is also expected to be accretive to non-GAAP EPS within the second full year post-closing and substantially accretive thereafter.

The combined company will have a strong balance sheet that supports rapid deleveraging. It is expected to generate substantial and sustained free cash flow, enabling it to reduce debt to less than 2x debt to Adjusted EBITDA within two years post-closing. The long-term leverage target is less than 1x, allowing Synopsys to maintain investment-grade credit ratings.

Cost and revenue synergies are also anticipated, with the combined company aiming to achieve approximately $400 million of run-rate cost synergies by year three post-closing and approximately $400 million of run-rate revenue synergies by year four post-closing. These synergies are expected to grow to over $1 billion annually in the longer term.

The transaction terms include Ansys shareholders receiving $197.00 in cash and 0.3450 shares of Synopsys common stock for each Ansys share. This represents a premium of approximately 29% over Ansys’ closing stock price on December 21, 2023, and a premium of approximately 35% to Ansys’ 60-day volume-weighted average price.

Synopsys intends to fund the cash consideration of $19 billion through a combination of cash on hand and debt financing. It has secured $16 billion of fully committed debt financing. The transaction is expected to close in the first half of 2025, subject to approval by Ansys shareholders, regulatory approvals, and customary closing conditions.

The financial advisory teams involved in the transaction include Evercore for Synopsys and Qatalyst Partners LP for Ansys. Legal advisors include Cleary Gottlieb Steen & Hamilton LLP for Synopsys and Skadden, Arps, Slate, Meagher & Flom LLP and Goodwin Procter LLP for Ansys.

Both companies will host a joint conference call on January 16, 2024, to discuss the announcement and provide further details about the acquisition.

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Background Information

About Synopsys: Synopsys is a prominent American software company that specializes in electronic design automation (EDA) and semiconductor intellectual property. Founded in 1986, Synopsys provides cutting-edge tools and solutions for designing and testing complex integrated circuits and electronic systems. Their software aids in the development of semiconductors, electronic products, and software applications, playing a crucial role in advancing technological innovation across various industries. For more detailed information about their offerings and contributions, you can visit their official website at

Technology Explained

EDA: EDA stands for Electronic Design Automation, and it refers to a category of software tools and solutions used in the design and development of electronic systems and integrated circuits. EDA tools assist engineers and designers in creating complex electronic designs, from individual components to entire systems, by automating various aspects of the design process. These tools encompass a wide range of functionalities, including schematic capture, simulation, layout design, verification, and testing.