Synopsys (SNPS) Moves Ahead in Ansys Merger After FTC Divestiture Order
The Federal Trade Commission (FTC) issued a divestiture order on May 28, requiring Synopsys Inc. (NASDAQ:SNPS) and Ansys Inc. (NASDAQ:ANSS) to divest certain assets to resolve antitrust concerns surrounding their $35 billion merger. The FTC stated that the order is necessary to allow the deal to proceed while maintaining competition in software markets critical to the design of semiconductors and optical devices.
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Announced in January 2024, Synopsys' acquisition of Ansys is part of its broader strategy to expand leadership in silicon-to-systems design. However, the FTC determined that the two companies compete directly in three key markets, and that the merger could lead to reduced innovation and higher prices for device manufacturers and consumers.
After extensive negotiations, the FTC's proposed consent order allows the companies to move forward, provided they divest certain overlapping assets. Synopsys must sell its optical and photonic design software, which supports the simulation of components like LEDs, lenses, and fiber optics. Ansys is required to divest PowerArtist, a tool used for power optimization in chip design.
These assets will be sold to Keysight Technologies (NYSE:KEYS). The companies must complete the divestitures within 10 days of Synopsys closing the acquisition.
Both firms have already made progress in addressing regulatory concerns. On its quarterly earnings call on May 28, Synopsys reported receiving merger clearances in all jurisdictions except China.
Synopsys provides end-to-end solutions for silicon-to-systems design, including EDA software, silicon IP, and system verification and validation.
While we acknowledge the potential of SNPS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SNPS and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
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