SAN FRANCISCO—EDA and IP vendor Synopsys Inc. said Wednesday (Feb. 22) it closed the $523 million acquisition of long-time rival Magma Design Automation Inc. and revealed that Rajeev Madhavan, Magma's chairman and CEO, would not be joining Synopsys as a result.
Few in EDA circles believed that Madhavan would join Synopsys as a result of the deal. Madhavan has been a fierce rival of Synopsys over the years, including engaging in a high-profile patent lawsuit that went to trial in 2006. Many believe that years of battles in court and the marketplace have bred personal animosity between Madhavan and Synopsys Chairman and CEO Aart de Geus.
Synopsys (Mountain View, Calif.), which also Wednesday reported quarterly results that exceeded analysts' expectations, said Madhavan would "be available for advice as we transition the company." Roy Jewell, Magma's president chief operating officer, will work with Synopsys on the integration of the companies, Synopsys said.
As per the original agreement, announced last November, Synopsys paid $7.35 per share to acquire Magma, or roughly $523 million net of cash acquired, the company said. Synopsys funded the acquisition using a combination of cash and debt, the company said.
Synopsys reported sales of $425.5 million for the quarter ended Jan. 31, up 9 percent from the previous quarter and up 17 percent from the year-ago quarter. The company reported a net income for the quarter of $56.69 million, or 39 cents per share, down 13 percent from the previous quarter but up 18 percent compared to the year-ago quarter.
On a pro forma basis, excluding charges, Synopsys reported a net income for the quarter of $82.3 million, or 56 cents per share, up from a pro forma net income of $68.3 million, or 44 cents per share, in the year-ago period.
Synopsys' results for the quarter, the first quarter of the company's fiscal year 2012, exceed consensus analysts' expectations, which called for sales of about $416 million and pro forma earnings of 52 cents per share, according to Yahoo Finance.
In a statement, de Geus said Syopsys' business for the fiscal first quarter was strong and broad-based. "Customers are aggressively moving to develop advanced new products, and demand for our technology and support is high," he said.
For the current quarter, Synopsys said it expects sales to decline to between $412 million and $420 million. The company said it expects to report income for the fiscal second quarter of 37 to 43 cents per share.
For the full year 2012, Synopsys said it now expects sales to be between $1.655 billion and $1.675 billion. The company said it expects to report earnings for the year of $1.33 to $1.48 per share.
Combined with a solid outlook for the rest of the year, our results allow us to raise our outlook for fiscal 2012, independent of any impact from the Magma Design Automation acquisition," de Geus said.
