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Acquisition of Ansys | 9 Months Ended
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Jul. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Acquisition of Ansys | Acquisition of Ansys On July 17, 2025, we completed our acquisition of Ansys pursuant to the terms of the previously announced Agreement and Plan of Merger, dated as of January 15, 2024 (the Merger Agreement) by and among Synopsys, Ansys and ALTA Acquisition Corp. (Merger Sub), a Delaware corporation and a wholly owned subsidiary of Synopsys. Pursuant to the Merger Agreement, Merger Sub merged with and into Ansys (the Ansys Merger), with Ansys surviving the Ansys Merger as a wholly owned subsidiary of Synopsys. At the effective time of the Ansys Merger (the Effective Time), each share of common stock, par value $0.01 per share, of Ansys (Ansys Common Stock) issued and outstanding immediately prior to the Effective Time (subject to certain exceptions) was converted into the right to receive (i) 0.3399 (the Exchange Ratio) of a share of common stock, par value $0.01 per share, of Synopsys (Synopsys Common Stock) (in the aggregate, the Stock Consideration) and (ii) $199.91 in cash, without interest (the Per Share Cash Amount, and in the aggregate, the Cash Consideration) (the Stock Consideration and the Cash Consideration, collectively, the Merger Consideration). In addition, we assumed certain outstanding Ansys options and other outstanding unvested Ansys equity awards held by continuing Ansys employees. The aggregate purchase consideration was approximately $34.9 billion, consisting of cash of $17.6 billion, S ynopsys Common Stock with a fair value of $17.1 billion, and the balance related to the assumption of certain outstanding Ansys equity awards and the settlement of pre-existing relationships. We acquired Ansys to combine Synopsys’ semiconductor electronic design automation expertise with Ansys’ S&A capabilities to address the growing demand for integrated design and simulation tools across various industries. We funded the Cash Consideration in the Ansys Merger through a combination of cash on hand, the net proceeds from the issuance of the Senior Notes, and the borrowings under the Term Loan Agreement, each as defined and discussed in Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements. The aggregate purchase consideration was preliminarily allocated as follows:
|  | (in thousands) |  |
Cash for outstanding Ansys Common Stock(1) |  | $ | 17,613,185 |  |  |
Fair value of Synopsys Common Stock issued for outstanding Ansys Common Stock(2) |  | 17,105,538 |  |  |
Fair value of assumed Ansys equity awards attributable to pre-combination services(3) |  | 130,963 |  |  |
Settlement of pre-existing relationships |  | 8,794 |  |  |
Total purchase consideration |  | 34,858,480 |  |  |
Less: cash acquired |  | (931,740) |  |  |
Total purchase consideration, net of cash acquired |  | $ | 33,926,740 |  |  |
Allocations |  |  |  |
Total current assets |  | 902,639 |  |  |
Property and equipment |  | 105,193 |  |  |
Goodwill |  | 23,493,632 |  |  |
Intangible assets |  | 12,990,000 |  |  |
Other long-term assets |  | 256,210 |  |  |
Deferred revenue |  | (637,076) |  |  |
Other current liabilities |  | (310,082) |  |  |
Long-term deferred revenue |  | (34,070) |  |  |
Long-term deferred tax liabilities |  | (2,677,401) |  |  |
Other long-term liabilities |  | (162,305) |  |  |
|  | $ | 33,926,740 |  |  |
(1) Represents the total cash paid to settle 88.1 million outstanding shares of Ansys Common Stock as of the Acquisition Date at $199.91 per share and a small portion for the settlement of fractional shares. (2) Represents the fair value of 30.0 million shares of Synopsys Common Stock issued to settle 88.1 million outstanding shares of Ansys Common Stock. Synopsys issued 0.3399 of a share of Synopsys Common Stock for each Ansys share. The fair value of Synopsys Common Stock was $571.20 per share as of the Acquisition Date. (3) Represents the fair value of assumed Ansys options and RSUs attributed to pre-combination services. See Note 15. Stock-Based Compensation for additional information. We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their preliminary estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of acquisition. These estimates and assumptions are believed to be reasonable, but they are inherently uncertain and may be subject to material change as additional information becomes available during the respective measurement period, which will not exceed 12 months from applicable acquisition date. The primary areas that are preliminary relate to the fair values of goodwill, intangible assets, certain tangible assets and liabilities, and income taxes. Goodwill is primarily attributed to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the Ansys business. The synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the Ansys Merger. The goodwill was assigned to the Design Automation reporting unit and the amount recognized was not deductible for tax purposes. The operating results of Ansys have been included in our condensed consolidated financial statements for the three and nine months ended July 31, 2025 from the Acquisition Date, and were not material to our financial results for either of these periods. Transaction Costs Transaction costs for acquisitions, primarily related to the Ansys Merger, were $114.9 million and $236.7 million during the three and nine months ended July 31, 2025, respectively. Transaction costs for acquisitions, including the Ansys Merger, were $53.0 million and $110.2 million during the three and nine months ended July 31, 2024, respectively. These costs mainly consisted of professional fees and administrative costs for closed and pending acquisitions and were expensed as incurred in our condensed consolidated statements of income. Intangible Assets The estimated fair value and weighted average useful life of the Ansys intangible assets were as follows:
| Fair value |  | Useful Lives
| (in thousands) |  | (in years)
Core/developed technologies(1) | $ | 6,500,000 |  |  | 6 - 9
Customer relationships(2) | 5,100,000 |  |  | 9
Contract rights intangible(3) | 440,000 |  |  | 2
Trademarks and trade names(4) | 950,000 |  |  | 23
Total identified intangible assets | $ | 12,990,000 |  |  |
(1) Core/developed technology was identified from the products of Ansys and its preliminary fair value was determined using the relief-from-royalty method under the income approach. The relief-from-royalty method applies a royalty rate to projected income to quantify the benefit of owning the intangible asset rather than paying a royalty for use of the asset. The discount rate was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted-average cost of capital, and weighted-average return on assets. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash-flows over the forecast period. (2) Customer relationships represent the preliminary fair value of future projected revenue that will be derived from sales of products to existing Ansys customers. The fair value was determined using the multi-period excess earnings method under the income approach, which involves isolating the net earnings attributable to the asset being measured based on present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. The economic useful life was determined based on historical customer turnover rates and the useful life of developed technology. (3) Contract rights intangible which represents contracted but unsatisfied or partially unsatisfied performance obligations, primarily relates to the dollar value of purchase arrangements with customers. The preliminary fair value was determined using the multi-period excess earnings method under the income approach. The economic useful life is based on the time to fulfill the outstanding order backlog obligation. (4)Trademarks and trade names refers to Ansys brand assets. The preliminary fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue attributable to Ansys brand assets. The economic useful life was determined based on the expected usage period of the brand assets and the anticipated cash flows over the forecast period. We believe the amounts of purchased intangible assets recorded above represent the fair values of and approximate the amounts a market participant would pay for these intangible assets as of the date of the Ansys Merger. The Optical Solutions Group and PowerArtist RTL Divestiture Following the determination that it was a necessary step towards obtaining governmental approval of and successfully closing the Ansys Merger, on September 3, 2024, we signed a definitive agreement for the sale of our Optical Solutions Group (OSG) to Keysight Technologies, Inc. (such sale, the Optical Solutions Divestiture). Ansys has similarly entered into a definitive agreement with Keysight Technologies, Inc. for the sale of its PowerArtist RTL business (such sale, together with the Optical Solutions Divestiture, the Regulatory Divestitures). The Regulatory Divestitures are subject to customary closing conditions, including approval by regulatory authorities. The assets and liabilities of OSG and PowerArtist have been classified as assets held for sale in the condensed consolidated balance sheets as of the Acquisition Date. OSG and PowerArtist are included in our Design Automation segment. The following table presents the major classes of assets and liabilities classified as held for sale as of July 31, 2025.
| (in thousands)
Assets: |
Accounts receivable, net | $ | 18,507 |
Inventories | 281 |
Prepaid and other current assets | 6,282 |
Property and equipment, net | 576 |
Operating lease right-of-use assets, net | 1,978 |
Goodwill | 31,523 |
Intangible assets, net | 15,170 |
Total current assets held for sale | $ | 74,317 |
Liabilities: |
Accounts payable and accrued liabilities | $ | 882 |
Operating lease liabilities | 2,103 |
Deferred revenue | 17,020 |
Total current liabilities held for sale | $ | 20,005 |
The Regulatory Divestitures did not represent a strategic shift in operations that would have a major effect on the Company's business and are also not material to our financial results, therefore, are not presented as discontinued operations. The measurement of assets held for sale to fair value less costs to sell resulted in a gain which will not be recognized until realized on the date of sale. Supplemental Pro Forma Information (Unaudited) The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Ansys had been acquired as of the beginning of fiscal year 2024.
| Three Months Ended July 31, |  | Nine Months Ended July 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (in thousands)
Pro forma total revenue | $ | 2,290,354 |  |  | $ | 2,105,893 |  |  | $ | 6,666,029 |  |  | $ | 6,385,630 |
Pro forma net income (loss) | $ | 214,539 |  |  | $ | 107,135 |  |  | $ | 294,183 |  |  | $ | (127,250) |

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