) Taiwanese arm is now set to acquire chip-design software provider
SpringSoft, which marks the fourth acquisition by the company year
to date. Taiwan-based SpringSoft was established in 1996 to develop
VLSI (Very-large-scale integration) chip design and debugging
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The acquisition, which is expected to be completed by Synopsys'
first quarter 2013 earnings announcement, is valued at NT$12.2
billion, which translates into $406.0 million. The transaction is
expected to be slightly accretive to fiscal 2013 non-GAAP earnings
Synopsys develops software used to design, test and manufacture
semiconductor chips. SpringSoft's offerings will therefore
complement its existing capabilities, enhancing its existing suite
of chip design solutions. The combined solutions will help its
customers to better address complex design requirements, thereby
creating room for more demand.
Strategic acquisitions have always been Synopsys' plan to
strengthen its product portfolio. In January 2012, the company
acquired privately-held software maker ExpertIO Inc. Then, RSoft
Design and Ciranova were acquired in May and July, respectively.
One thing to note here is that Synopsys has shown no initiative to
diversify to other lines of business, although its acquisitions
have consistently boosted its core competencies. Additionally,
taking over similar businesses enriches its portfolio, while
reducing integration time and cost.
Synopsys' healthy net cash balance and free cash flow position will
allow smooth funding for further acquisitions. Also, Synopsys'
product innovation strategy, the popularity of its time-based
license model and its tie-up with
Advanced Micro Devices Inc.
) are positives. But stiff competition from
Cadence Design Systems
), a challenging technology spending environment and uncertainty
regarding proper time to realize acquisition synergies keeps us on
Synopsys currently has a Zacks #3 Rank (short-term Hold