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Synopsys to Sell Unit for as Much as $2.1 Billion to Private Equity Firms

(Bloomberg) -- Chip-design company Synopsys Inc. is selling its software integrity business to two private equity firms for as much as $2.1 billion in cash.

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Clearlake Capital and Francisco Partners are buying the cybersecurity-focused business and will run it as a new, as-yet unnamed independent company, according to a statement issued Monday. Synopsys is getting $1.5 billion at closing, $125 million over five quarters and as much as $475 million contingent upon a specified rate of return.

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The move allows Synopsys to focus on its core business of supplying semiconductor design tools, Chief Executive Officer Sassine Ghazi said in the statement. The transaction comes about three months after the firm agreed to buy engineering software maker Ansys Inc. for about $34 billion in one of the largest tech acquisitions in recent years.

The divestment could be a boost for Synopsys’ margins, as the software integrity unit has been a drag on profit growth in recent years, wrote Piper Sandler Analyst Clarke Jeffries in an April note. Synopsys’ management first disclosed last year it was considering selling the unit. Some analysts consider the $2.1 billion price for the unit to be a discount.

Existing management of the software integrity unit are expected to lead the newly independent company, the firms said. The deal is expected to close in the second half of the year.

(Adds analyst commentary in the fourth paragraph.)

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