BEIJING (Reuters) -China’s market regulator has conditionally approved U.S. chip design software provider Synopsys’ acquisition of engineering design firm Ansys, clearing the last significant regulatory obstacle for the $35 billion buyout.
The State Administration for Market Regulation’s (SAMR) conditional approval, which came on Monday, would finally allow two major players in the electronic design automation (EDA) industry to combine. The deal, which was announced early last year, faced intense antitrust scrutiny in markets such as Britain.
After extensive investigations, the deal had received merger clearance in every jurisdiction except China, according to the companies. The deadline to close the deal ends on July 15, but can be extended till January next year.
Shares of Synopsys rose 3% in premarket trading, while those of Ansys were up 4.5%.
“With SAMR’s approval being the final outstanding regulatory clearance, we believe Synopsys and Ansys will now move swiftly to finalise the transaction,” Berenberg analysts said.
Months of back-and-forth over U.S. restrictions on export of EDA tools to China had led to fears of Chinese regulators possibly blocking the deal in retaliation.
The U.S. earlier this month lifted restrictions on exports to China for chip design software developers, which allowed companies such as Synopsys and competitor Cadence Design Systems to restore access for Chinese customers.
The Chinese regulator approved the deal based on some commitments submitted by the companies, to be fulfilled by the merged entity.
The companies will have to continue supplying EDA products to Chinese customers on fair and non-discriminatory terms.
The conditions also require the companies to honour existing customer contracts, maintain existing interoperability agreements and renew them on request from Chinese customers.
Interoperability agreements are often put in place to ensure different systems, across organizations, are able to work seamlessly and can be used to enable information sharing.
Synopsys’ acquisition of Ansys could help its competitive position against Cadence, making it a larger rival with a more diverse set of design tools under its belt, analysts say.
(Reporting by Liam Mo, Brenda Goh and Arsheeya Bajwa; Editing by Himani Sarkar, Rachna Uppal, Kate Mayberry and Shinjini Ganguli)
