(Bloomberg) -- Synopsys Inc.’s $35 billion plan to take over software developer Ansys Inc. could be cleared if the two companies address competition concerns flagged by the UK’s antitrust watchdog, according to the regulator’s statement.
The all-American deal raises competition concerns in the supply of semiconductor chip design and light simulation products in the UK, the Competition and Markets Authority said. The deal will face a deeper antitrust investigation “if suitable proposals are not submitted,” the CMA said on Friday.
The announcement was expected and steps are underway to address the concerns raised by the CMA, according to a Synopsys spokesperson. “We continue to expect the transaction to close in the first half of 2025,” the spokesperson said.
The deal is one of a spate of tech transactions earmarked by the CMA for close scrutiny in recent years, as the regulator homed in on mergers involving AI, the cloud and chips. The UK’s antitrust watchdog will be armed with a tougher powers under the new digital markets rules next year.
California-based Synopsys is among a few major companies making software used to design semiconductors while Ansys makes simulation software used by engineers to help predict how products will work in the real world. The acquisition, which was announced in January, aims to expand Synopsys’ customer base and its suite of products.
Shareholders of Pennsylvania-based Ansys will receive $197 in cash and 0.345 shares of Synopsys stock per share, Synopsys said when the deal was announced.
The merger could reduce choice for customers, which are mostly major companies, that rely on software products related to all crucial semiconductor chips and light simulation software used for products such as camera lenses and TV displays, according to the CMA.
The deal could reduce competition in the supply of three software products where Synopsys and Ansys have strong market positions and compete closely with one another.
The concerns relate to analysis used to check how much power a chip consumes and requires to function and software used to design and model light-related products, the CMA said.
Synopsys previously announced plans to sell its optical solutions business to Keysight Technologies Inc., subject to the closing of the deal, Synopsys said in the statement. “We will continue our constructive and collaborative engagement with the CMA in relation to our proposed remedies.
Ansys spokespeople didn’t immediately respond to an email seeking comment.
(Updates with details from the CMA’s decision and background throughout.)
©2024 Bloomberg L.P.