EU Approves $35B Synopsys-Ansys Merger with Conditions

Synopsys' Acquisition of Ansys Approved by European Commission

The European Commission (EC) has formally approved the acquisition of Ansys by Synopsys. However, this approval is contingent upon the divestment of specific software products by the involved companies, as stipulated by the proposed remedies.

Details of the Acquisition

Synopsys, a leading provider of chip design software, initially announced its intention to acquire Ansys in January of the previous year. Ansys specializes in simulation software, enabling engineers to model and analyze the physical characteristics of products – including semiconductors – and assess their performance in real-world scenarios.

Valued at $35 billion, this transaction represents the largest deal within the technology sector since Broadcom’s $69 billion acquisition of VMware. Similar to the Broadcom-VMware merger, this deal underwent extensive regulatory review.

Regulatory Concerns and Remedies

Regulators expressed concerns that the combined entity would establish a dominant force in chip design and simulation. This consolidation could potentially hinder competition from companies lacking a comparable integrated offering.

Consequently, the EC has mandated that Synopsys and Ansys sell off overlapping segments of their respective businesses to a purchaser deemed suitable by the Commission.

Divestments Required for Approval

Synopsys had previously agreed to sell its Optical Solutions Group to Keysight. Now, further divestments are required, including its optics and photonics software suite. This includes products like Code V, LightTools, LucidShape, RSoft, and ImSym.

Ansys is also obligated to divest PowerArtist, a software solution used for detailed analysis and optimization of power consumption in electronic circuits.

EC Statement on the Approval

Teresa Ribera, the European Commission’s executive vice president, stated that the acquisition initially posed a risk to competition in key global markets for chip and product design software.

However, she affirmed that the structural remedies offered by the companies will safeguard competition and ensure continued access to innovative tools at competitive pricing for customers.

The approval allows the merger to proceed, fostering innovation while addressing potential anti-competitive effects.

Merger Approval Progress

The U.K.'s Competition and Markets Authority (CMA) initiated an antitrust review of the deal in August. Recently, the CMA signaled its acceptance of the offered divestment plan.

However, today's announcement doesn't guarantee the finalization of the agreement. The Federal Trade Commission (FTC) was also conducting a review of the planned merger.

Both Synopsys and Ansys maintain substantial operations in China, prompting scrutiny from the country’s State Administration for Market Regulation (SAMR), which reportedly requested concessions.

A representative for Synopsys affirmed ongoing collaboration with the FTC regarding potential remedies. They also stated continued engagement with regulatory bodies globally, including those in China.

“We are delighted with the EC’s Phase 1 approval of this transaction, which is expected to foster competition,” the spokesperson stated. “This clearance represents significant advancement in securing regulatory approvals across multiple regions.”

The filing with China SAMR has been officially accepted, and its evaluation is currently underway. Work continues with regulators in other pertinent jurisdictions to finalize their assessments.

The company anticipates the completion of the transaction during the first six months of 2025.