Synopsys (NASDAQ:SNPS) stated in a regulatory filing on Thursday that China’s State Administration for Market Regulation (SAMR) has flagged the chip software maker’s acquisition of Ansys (NASDAQ:ANSS). The Chinese regulator has taken the stance that the company must receive regulatory approval before it can proceed, despite the transaction falling below China’s merger notification thresholds.
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Synopsys has stated that it is working with Ansys on its next steps and expects the acquisition to close in the first half of next year.
Details of Synopsys’ Acquisition of Ansys
Earlier this year, Synopsys announced the acquisition of software company Ansys in a cash and stock deal worth $35 billion. According to the terms of the deal, Ansys shareholders will receive $197 in cash and 0.3450 shares of Synopsys common stock for each Ansys share.
The acquisition is expected to merge Synopsys’ semiconductor electronic design automation (EDA) with Ansys’ simulation portfolio, positioning Synopsys as a comprehensive silicon-to-systems design provider. This move is projected to expand Synopsys’ market by 1.5 times to $28 billion, with a compound annual growth rate (CAGR) of around 11%.
Regulatory Troubles for the Acquisition
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bearish on SNPS had stated that the deal could face regulatory challenges and could be a key “hurdle to clear for the ANSS acquisition.”
Is SNPS a Good Stock to Buy?
Analysts remain bullish about SNPS stock, with a Strong Buy consensus rating based on a unanimous 10 Buys. Over the past year, SNPS has surged by more than 50%, and the average SNPS price target of $639.44 implies an upside potential of 12.3% from current levels.
