The European Commission (EC) has given the green light for Synopsys to acquire Ansys, although the companies must sell various software products as part of the proposed remedies. Synopsys, a developer of chip design software, revealed in January last year its plan to acquire Ansys, a developer of simulation software that helps engineers model and analyze the physical behavior of chips and other products and evaluate their actual performance.
The $35 billion deal, involving two publicly traded companies, is the largest such deal in the technology sector since Broadcom's $69 billion acquisition of VMware. That merger also attracted intense scrutiny from regulators and was finally approved by the European Commission in July 2023 after both parties agreed to commit to continued access and interoperability.
The crux of the matter, as far as regulators are concerned, is that such a merger would create a comprehensive chip design and simulation giant, strangling rivals that can't offer that combination. As a result, the European Commission now says the two companies will sell the overlapping parts of their businesses to a "suitable buyer" approved by the Commission.
Synopsys already has an agreement to sell its optical solutions division to Keysight, but now it will also sell its optics and photonics software such as CodeV, LightTools, LucidShape, RSoft, and ImSym. Ansys will also spin off PowerArtist, which analyzes and optimizes the power consumption of electronic circuits at a very granular level.
Teresa Ribera, the European Commission's executive vice president for a clean, fair and competitive transition, said in a statement: "We had concerns that this acquisition could seriously harm competition in certain global markets for chip or other product design software. However, thanks to clear structural remedies proposed by both parties, competition in these markets will be maintained and customers will continue to have access to innovative tools at competitive prices."
The U.K.'s Competition and Markets Authority (CMA), which launched an antitrust investigation into the deal back in August, said earlier this week it was also willing to accept the proposed divestment.
But today's announcement does not necessarily mean the deal is complete. The US Federal Trade Commission (FTC) has also been keeping an eye on the proposed merger, while both Synopsys and Ansys also have significant ties in China - with the State Administration for Market Regulation (SAMR) reportedly seeking remedies.
A Synopsys spokesperson confirmed that the company is still "working with the U.S. Federal Trade Commission" to consider remedial measures, and is also continuing to work with other markets around the world, including China.
"We are pleased that the European Commission has approved the first phase of our pro-competitive transaction," the spokesman said. "Ahead of today's approval decision, we have made significant progress in obtaining regulatory approvals in each jurisdiction," the spokesperson said. The State Administration for Market Regulation of China has officially accepted our application and its review is in progress. In addition, we continue to work with regulators in other relevant jurisdictions to complete their reviews. "
The transaction is expected to close in the first half of 2025, the spokesperson added.