On December 23, according to Reuters, citing people familiar with the matter, Synopsys, a major EDA software and semiconductor IP manufacturer, has submitted an acquisition offer to Ansys, a major industrial software manufacturer with a market value of $30 billion.
According to the report, the acquisition talks coincide with the transition of rights to Synopsys, and current Chairman and CEO Aart de Geus is preparing to transition to the executive chairman of the board of directors of Synopsys on January 1, 2024, and Sassine Ghazi will officially become the company's president and chief executive officer. As the new officials take office, this major acquisition could be a key move for Sassine Ghazi as she seeks to drive further change and growth at Synopsys.
Synopsys is one of the companies that has been in talks with Ansys about a potential deal that ANSYS has received** more than $400 per share (corresponding to a deal value of or close to $35 billion), and if talks do not break down, the deal could be announced in the coming weeks.
However, the source added that Ansys has attracted other acquirers, but it is uncertain whether Synopsys' bid will ultimately win.
Notably, Bloomberg also reported earlier on Thursday local time that Ansys was considering**, but did not disclose any acquirers.
At this time, both Ansys and Synopsys declined to comment for this information.
ANSYS, a global CAE software giant
Founded in 1970 and headquartered in Canonsburg, Pennsylvania, ANSYS is a company specializing in the development and sales of engineering software, and is also the world's largest CAE (Computer Aided Engineering) software manufacturer.
CAE software is mainly used for simulation analysis, which is essentially a computer program that solidifies the algebraic solution process obtained after mathematical processing of the theoretical models of physics and engineering disciplines, and includes rich engineering data, models and simple and easy-to-operate user interface and result analysis functions. As a comprehensive and knowledge-intensive information product, CAE integrates algorithms and technologies from physics, mathematics, engineering, computer science and other disciplines, involving a wide range of disciplines and complex models, which requires a deep theoretical foundation and continuous technological innovation.
Since the establishment of the company, ANSYS has been focusing on the development and improvement of engineering technology, through more than 50 years of product development and a series of acquisitions and integration, gradually formed a complete product line covering 3D design, electromagnetics, embedded software, fluids, optics, platforms, semiconductors, structures and systems, with powerful functions, high flexibility and good user interface, have ranked first in the FEA evaluation over the years.
The current ANSYS product line includes the Structural Analysis (ANSYS Mechanical) family, the Fluid Dynamics (ANSYS CFD Fluent CFX) family, the Electronic Design (ANSYS ANSOFT) family, and ANSYS Workbench and EKM. Ansys' industry solutions span automotive, aerospace and defense, automotive, industrial equipment, electronics, biomedicine, energy, materials and chemical processing, semiconductors and more.
With more than 4,900 employees in more than 60 strategic locations around the world, Ansys has more than 2,750 academic collaborators, more than 250 solution partners in 92 countries, and serves more than 15,000 customers. At present, more than 100 science and engineering colleges and universities in China have adopted ANSYS software for finite element analysis or as standard teaching software.
According to the financial report, ANSYS achieved total operating revenue of 20$6.6 billion, up 833% and achieved a net profit of 5$2.4 billion, up 1520%。The compound growth rate of the company's total revenue and net profit from 2013 to 2022 is 1021% and 881%, and the company achieved a total operating income of 14$6.5 billion, up 681%, the company's overall business maintained a stable growth trend.
From the perspective of revenue structure, Ansys' business is mainly composed of software licensing and maintenance and other services, and the company's software franchise revenue in 2022 is 9$8.9 billion, or 4.7 percent of total revenue87% and 10% from maintenance and other services$7.7 billion, or 5.2 percent of total revenue13%。Among them, software concessions can be divided into lease license revenue and perpetual license, and the company's maintenance and other service revenue in the first three quarters of 2023 is 8$7.8 billion, with rental license revenue of $3US$8.6 billion, with the combined ratio of the two items to total revenue reaching 8635%。Who, high-sticky customer relationships provide ANSYS with consistent revenue and build the fundamentals of the business.
From the perspective of gross margin changes, the gross profit margin of Ansys' overall revenue since 2016 has remained above 85%, and the net profit margin has remained around 25%, of which the net profit margin reached 32 in 201842%, with an overall ANSYS gross margin of 8578%, profitability remained stable.
According to the data of "China's Industrial Software Industry *** 2020", China's high-end CAD (computer-aided design), CAE, MES (manufacturing execution system), PLM (product life cycle management) and other R&D and design software markets are monopolized by foreign manufacturers such as Ansys, Dassault Systems, Siemens, and MSC. In 2019, the number of Chinese enterprises in China's R&D and design software products accounted for a relatively low percentage.
According to IDC, the total CAE market size in China will be about 37 in 2022600 million yuan (statistical revenue is CAE software subscription and one-time license revenue, excluding consulting, implementation, training and other service revenue), the top three manufacturers in market share are Ansys, Siemens and Dassault Systèmes, although the market share has declined year-on-year in 2021, of which Ansys' share has increased from 191% down to 168%, Siemens from 165% down to 147%, Dassault Systèmes from 102% down to 79%, but these three companies still account for nearly half of the market.
It is worth mentioning that although China's domestic CAE industrial software market is not yet mature, a number of enterprises have emerged in the industry, in addition to Suochen Technology, ZWSOFT, Nexperia Asia Pacific, Inter** and other companies are actively deployed in the field of CAE software, and have achieved a certain degree of breakthrough, and are expected to break the monopoly of overseas manufacturers in this field in the future. According to the data of Zhiyan Consulting, the localization rate of CAE in China has increased from 7 in 20160% to 16 in 20222% and continue to grow.
Ansys shares jumped 1808%, Synopsys shares fell 634%
Affected by the acquisition rumors, Ansys shares rose 1808% to close at 357$98 shares, with a market capitalization of 310$9.9 billion. However, it is still far below the rumored $400 share offered by Synopsys, which corresponds to about $347 even on a $400 basis$500 million valuation. While Ansys' stock price soared, Synopsys' stock price fell 634%, and the market capitalization fell to 797$1.1 billion.
According to Synopsys' latest earnings report, in fiscal year 2023, its revenue reached a record 58US$4.3 billion, a year-on-year increase of 15%;GAAP net income was 12$3 billion, or $7.0 per diluted share$92, compared to $6 in the same period last year$29;Non-GAAP net income for fiscal year 2023 was 17$3.7 billion, up 27% year-over-year, or 11.5% per diluted share$19, compared to $8 in the same period last year$90.
Looking ahead to the first quarter of fiscal 2024, Synopsys expects revenue of 16300 million to 16$600 million, of which the median value exceeded Wall Street's expectations of 15$7.8 billion;Adjusted earnings per share will be at 3$40 to $3$45, which is higher than the average Wall Street expectation of 305 USD. Synopsys also expects full-year fiscal 2024 revenue to be in the range of 65700 million to 66$300 million, or adjusted earnings per share of 1333-13.$41.
While Synopsys is doing well and Ansys is doing well (as mentioned earlier), the overall market in which Ansys operates is not too large. According to Grand ViewResearch statistics, the global CAE software market size will be about $9.2 billion in 2022, and the downstream application industries are mainly automotive, defense and aerospace, electric power, medical equipment, and industrial equipment, covering a comprehensive range of industries. According to Research and Markets**, the global CAE software market size is expected to reach 161$900 million, with a CAGR of about 91%。
In other words, the expected market size of Ansys' core CAE software business by 2028 is only 161$900 million. If ANSYS were acquired for $400 shares, the corresponding transaction would be worth about 347$500 million. Apparently, the collapse in Synopsys' stock price may be due to the market's perception that Synopsys is overpriced.
Editor: Xinzhixun-Ronin Sword Part of the information**: Zheshang**.