Shares in semiconductor design products company Synopsys (SNPS -1.15%) spiked higher by 5.5% in early trading today before settling back later in the day. The move came after the U.S. Federal Trade Commission (FTC) gave conditional approval for its intended $35 billion acquisition of simulation and analysis software company Ansys (ANSS -0.18%).
For reference, the European Commission has already approved the acquisition. Synopsys is now awaiting approval from China before potentially closing the deal in the second half of 2026.
Why this acquisition matters
The Ansys acquisition is a bold move, designed to stay ahead of the trend in its end markets. Synopsys manufactures electronic design automation (EDA) equipment used by semiconductor companies, as well as by a growing list of companies designing chips to embed in their technology. Meanwhile, Ansys makes simulation and analysis software that measures how physical products (including semiconductors) perform.
Image source: Getty Images.
As such, the “new” Synopsys will help companies design chips and products, and also help them analyze how they behave. It’s an exciting deal because as semiconductors become increasingly embedded in a broader range of products with ever-increasing complexity, they will require more simulation analysis.
Where next for Synopsys?
The deal has become an integral part of the investment case for buying Synopsys stock, and the conditional FTC approval will likely please investors who purchased the stock in anticipation of the long-term growth opportunities arising from the deal. It’s also in line with a larger trend in the industry — Siemens recently acquired industrial simulation and analysis company Altair.
Investors will be hoping that Synopsys completes the Ansys deal in due course. Today’s news brought that possibility one large step closer.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Synopsys. The Motley Fool recommends Ansys. The Motley Fool has a disclosure policy.
