In an effort to broaden its product portfolio and expand globally, Synopsys Inc.SNPS recently signed a definitive agreement to acquire Atrenta Inc., a SoC realization solutions provider for the semiconductor and consumer electronics industries. However, the financial terms of the deal have not been disclosed.
Atrenta is a well known name in the electronic design automation (EDA) industry and enjoys a leading position among static and formal technology providers that cater to various design and verification teams across the world. The company claims that its solutions SpyGlass, GenSys and BugScope enhance the efficiency in SoC design and verification.
Synopsys intends to integrate Atrenta's complementary static verification and implementation technology with its Verification Continuum and Galaxy Design platforms. The integration will facilitate Synopsys in offering a more comprehensive portfolio of software solutions to designers.
Moreover, through the acquisition Synopsys will gain Atrenta's customers thereby boosting its top line. The deal is expected to be completed this summer subject to Hart-Scott-Rodino (HSR) regulatory review and other customary closing conditions.
Synopsys sells EDA software to the semiconductor and electronics industries. In the current economic scenario, customers are strengthening their supplier relationships and focusing on cost efficiencies, and many have selected Synopsys as their primary EDA partner.
Acquisitions are central to the company's growth strategy and help it gain to access to newer markets and technologies. Some of its recent notable buyouts include Codenomicon, Coverity and Target Compiler Technologies.
Also, since intensifying competition is making the EDA market tougher to penetrate, acquisitions have helped the company to boost revenues. The company has recently reported the second-quarter fiscal 2015 results wherein revenues witnessed a year-over-year increase of 7.6%.
We believe that the company's sustained focus on product launches, acquisitions and deal wins will boost results, going ahead. Moreover, unique intellectual properties and global support provided by the company will likely drive its results. Additionally, the company's acquisitions will expand its reach in the software quality, testing and security tools market.
However, competition from Cadence Design Systems Inc. CDNS and Mentor Graphics Corp. MENT coupled with a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.
Currently, Synopsys has a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Advent Software Inc. ADVS , sporting a Zacks Rank #1 (Strong Buy).
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