The two companies can now submit proposals to address the CMA’s concerns or the watchdog may progress to a phase 2 investigation.
The UK’s competition watchdog has found that a proposed $35bn acquisition by chip designer Synopsys of software maker Ansys could negatively affect competition.
Announcing the results of its phase 1 investigation today (20 December), the Competition and Markets Authority (CMA) found that the deal could reduce competition in the supply of certain semiconductor chip design and light simulation products in the UK.
“This could lead to a loss of innovation, lower quality software and/or higher prices which may then be passed onto UK businesses and consumer,” the CMA said.
However, the CMA added that it could approve the deal if its concerns are adequately addressed.
The two businesses, which have been working together for a number of years, originally announced the deal in January. At the time, Synopsys president and CEO Sassine Ghazi called it “the logical next step” in their business relationship.
The deal is expected to combine Synopsys’ expertise in semiconductor design with the simulation and analysis tech provided by Ansys, which can be used to make a wide range of products ranging from airplanes to tennis rackets, and thus increase the combined company’s total addressable market by 50pc, bringing it to $28bn.
In its findings, the CMA explained that its concerns relate to three software products – for chip power analysis, optics software and photonics software.
Naomi Burgoyne, the senior director of mergers at the CMA, said that both Synopsys and Ansys now have the opportunity “to offer solutions to address our concerns, otherwise the deal will be referred to an in-depth Phase 2 investigation”.
In a statement today, Synopsis said that the company has already taken steps to address all the concerns raised by the CMA, including that it plans to sell its optical solutions business to Keysight if it acquires Ansys.
“We remain confident in a positive resolution of the ongoing regulatory review process, and we continue to expect the transaction to close in the first half of 2025.”
Last year, Synopsys expanded its partnership with Intel to bring new intellectual property and automation services to Intel’s Foundry Services, with the aim of enabling customers to speed up the design, execution and project schedules for their system-on-chips.
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