Synopsys Receives China's Approval for $35 Bln Ansys Acquisition Amid US-China Tensions

Synopsys has received China's approval to finalize its $35 billion acquisition of Ansys. The deal, expected to close around Thursday, removes the last major hurdle after U.S. and EU regulatory bodies previously cleared it. Chinese regulators approved the transaction with conditions, including maintaining existing contracts with Chinese clients. Ansys shareholders will receive $197 in cash and 0.3450 shares of Synopsys for each Ansys share.

Synopsys (SNPS) has received conditional approval from the State Administration for Market Regulation in China to finalize its $35 billion acquisition of Ansys (ANSS). The deal, initially announced in early 2024, faced regulatory scrutiny in various jurisdictions, including the United States and the European Union. However, after months of negotiations, Chinese regulators have cleared the last significant hurdle, paving the way for the merger [1].

The conditional approval comes with several stipulations, including the maintenance of existing contracts with Chinese clients and the fulfillment of commitments to continue supplying electronic design automation (EDA) products. Synopsys and Ansys expect to close the transaction on or around July 17, 2025, according to the companies' statements [1].

The approval has had a positive impact on both companies' stock prices. Synopsys shares rose by 2.2% in early trading, while Ansys shares increased by 5% [1]. The deal is expected to enhance Synopsys's leadership in chip-design software by combining the strengths of both companies.

Analysts have provided positive forecasts for Synopsys. The average one-year price target for Synopsys is $593.51, with a high estimate of $658.01 and a low estimate of $520.00, suggesting an average upside of 6.12% from the current price of $559.28 [1]. The consensus brokerage recommendation is "Outperform," indicating a strong market sentiment [1].

The acquisition of Ansys will bolster Synopsys's AI-powered silicon to system design solutions, aligning with the company's strategic focus on AI for chip design. Synopsys has seen strong demand for its AI capabilities, including DSO.ai and VSO.ai, and the acquisition of Ansys is expected to further enhance this area [2].

Despite the positive developments, Synopsys continues to face challenges, including a decline in revenue from China due to macroeconomic conditions and export restrictions. Additionally, the company faces potential regulatory challenges and uncertainty regarding the impact of BIS export restrictions on its sales to China [2].

References:
[1] https://www.gurufocus.com/news/2974895/synopsys-snps-gains-approval-for-ansys-acquisition-in-china-snps-stock-news
[2] https://www.gurufocus.com/news/2974664/first-look-synopsys-waters-and-bhp-lead-strategic-moves