Synopsys Inc. said it has agreed to acquire rival semiconductor IP and software vendor Synplicity Inc. for approximately $227 million in a deal that would greatly expand its offerings to the communications, military/aerospace and consumer electronics markets.
Synopsys said it will pay $8 per share for all of Synplicity's outstanding common shares, representing a premium of slightly more than 50 percent on Synplicity's stock price of $5.32 just ahead of the announcement.
Synplicity's stock price surged almost 48 percent in after hour trading on Thursday (March 20) following the announcement of the Synopsys offer. The company's share price had traded as high as $7.16 in the last one year.
The offer is seen helping Synopsys increase its offering to customers in growing markets, including systems and mid-tier segments, according to chairman and CEO Aart deGeus.
The company has been using its considerable cash hoard—almost $1 billion in cash and short-term securities as at the end of its fiscal 2007—to reinforce its leadership position in the semiconductor IP market through selective acquisitions, including the purchase of Sandwork Design Inc. last October and Mosaid Technology Inc.'s IP assets in July 2007.
The Synplicity acquisition "will support our strategy to provide rapid prototyping capabilities to a broad set of customers to enable much faster software development, and will enhance Synplicity's already strong offering in FPGA implementation," deGeus said in a statement.
Synplicity's annual revenue rose in 2007 to $71.2 million, up 14 percent from $62.5 million in the previous year. Net income climbed to $13 million, or 47 cents per share, during 2007, more than quadrupling from the $3 million the company posted in 2006.
For the fiscal year ended October 31, 2007, Synopsys reported net income of $130.5 million on revenue of $1.2 billion. The company posted net income of $24.7 million in fiscal 2006 on revenue of $1.1 billion.