SANTA ROSA, Calif. - Keysight Technologies , Inc. (NYSE: NYSE:KEYS), a prominent player in design, emulation, and test solutions, announced its plan to purchase Synopsys, Inc.'s (NASDAQ: NASDAQ:SNPS) Optical Solutions Group. This acquisition, pending customary closing conditions and regulatory approvals, is set to enhance Keysight's software portfolio with advanced optical system design and simulation tools.
The deal is contingent on the successful completion of Synopsys' acquisition of Ansys (NASDAQ:ANSS), which is anticipated to close in the first half of 2025. The Optical Solutions Group is recognized for its suite of software solutions that cater to optical systems design, analysis, simulation, and virtual prototyping.
Niels Faché, Vice President and General Manager at Keysight's Design Engineering Software, expressed enthusiasm for the expansion of Keysight's software simulation offerings. He highlighted the acquisition's potential to enable high-performance system use cases extending beyond electronics to include optics and photonics.
The acquisition aims to complement Keysight's existing expertise in radio frequency (RF) and microwave electronic design automation (EDA), as well as physics-based computer-aided engineering. By integrating the Optical Solutions Group's software and expert team, Keysight seeks to address complex design challenges and bolster its multi-physics simulation capabilities.
Ravi Subramanian, General Manager at Synopsys' Systems Design Group, remarked on the legacy of the Optical Solutions Group, emphasizing the benefits to customers from the sustained competition in optical design solutions that the acquisition promises.
Keysight Technologies, an S&P 500 company, is known for aiding engineers in developing and deploying products quickly and with reduced risk across various industries, including communications, industrial automation, aerospace and defense, and automotive.
This acquisition is expected to fortify Keysight's position as a comprehensive solution provider in the design engineering domain. The transaction details remain subject to regulatory review and are based on a press release statement.
In other recent news, Synopsys Inc . has launched ImSym, an imaging system simulator platform aimed at enhancing the development process for imaging products. The platform allows for comprehensive simulation of the entire imaging chain, potentially boosting efficiency up to 60 times compared to traditional methods. Apart from its simulation capabilities, ImSym also promotes team collaboration through a unified design environment.
Synopsys also reported strong financial performance in the third quarter of 2024, with a 13% increase in revenue and a 27% growth in non-GAAP earnings per share (EPS), exceeding its targets. Deutsche Bank maintained a Buy rating on Synopsys, attributing the strong performance to significant hardware sales and a 32% year-over-year rise in Intellectual Property (IP) revenue.
The company is in the process of acquiring Ansys to enhance its system design capabilities and is finalizing the sale of its software integrity business. Synopsys' full-year guidance for 2024 anticipates revenue between $6.105 billion and $6.135 billion, and non-GAAP EPS ranging from $13.07 to $13.12. Griffin Securities maintained a strong Buy rating on Synopsys, citing continued momentum in the company's Design Automation sector. These are among the recent developments for Synopsys.
InvestingPro Insights
As Synopsys, Inc. (NASDAQ: SNPS) gears up for its acquisition by Keysight Technologies, the company's financial health and market position offer insights into the potential value it brings to the deal. Synopsys stands out with impressive gross profit margins, as reflected in the last twelve months leading up to Q3 2024, where the company reported a robust gross profit margin of 80.5%. This figure underscores the efficiency of Synopsys' operations and its ability to retain a significant portion of its revenue as profit.
In the same period, Synopsys exhibited strong revenue growth of 26.26%, signaling its expanding market reach and business scale. This growth trajectory is consistent with the company's reputation as a prominent player in the software industry, a factor that likely contributed to Keysight's acquisition decision. Moreover, with a market capitalization of $79.03 billion, Synopsys represents a substantial addition to Keysight's portfolio.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, indicating positive sentiment about Synopsys' financial prospects. Furthermore, the company's liquid assets exceed short-term obligations, providing it with a solid liquidity position. For readers interested in a deeper dive into Synopsys' financial health and market performance, InvestingPro offers additional tips, with a total of 17 tips available, including insights on profitability and valuation multiples.
To explore these tips and gain a comprehensive understanding of Synopsys' financial metrics, visit https://www.investing.com/pro/SNPS for an in-depth analysis.
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