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Date:1st Dec 2011
Synopsys to acquire Magma
Synopsys has signed a definitive agreement to acquire Magma.
This is a highly beneficial acquisition for Synopsys. But
for Magma it's no great deal. Under the terms of the merger
agreement, Synopsys will acquire Magma for $7.35 per Magma
share in cash, resulting in a transaction value of approximately
$507 million net of cash and debt acquired, this is no big
offer for Magma, for its unique set of high performance
tools used in most advanced nodes of semiconductor chip
fabrication.
With this Synopsys is going to have a bigger market share
in VLSI design software. From all the basic verifications
to GDS tools, Synopsys will have better offering compared
to its competitors, mainly Cadence and Mentor Graphics.
Now the top three namely Synopsys, Mentor Graphics and Cadence
will nearly dominate the EDA software space.
Mergers and acquisitions are more common in EDA software
business than in any other industry. In fact, the top three
have grown in this business much by acquisitions, this is
more relevant for Synopsys and Cadence. Magma is headed
by Indian origin American Rajeev Madhavan. Indian entrepreneurs
are good in building successful EDA startups even earlier
too. They finally end up selling their business.
Aart de Geus, chairman and CEO of Synopsys and his colleagues
at Synopsys can now cheer up and tell their semiconductor
customers, we are one-stop-shop for your VLSI design software.
He says this acquisition will enable Synopsys to accelerate
the delivery of the technology our customers need to keep
the overall cost of design in check.
For its fourth quarter of fiscal 2011, Synopsys reported
a revenue of $390.5 million, compared to $375.5 million
for the fourth quarter of fiscal 2010. Revenue for fiscal
year 2011 was $1.536 billion, an increase of 11.2 percent
from $1.38 billion in fiscal 2010. It might be a small increase
but that's the way in EDA software, where profits are higher
than other businesses. EDA industry grows when chips sales
go down.
Can Cadence' collaborative EDA software model called EDA360
beat Synopsys tools? Possible, because in future it is more
of a collaboration rather than single entity owning and
controlling most essential tools required for promoting
advanced technologies in semiconductor domain.
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