Welcome to 2024! Deal fever continues …
I hope you were able to catch a little downtime over the year-end and that your 2024 is off to a great start. We had three winter storms in a week, lost power, shoveled a lot of snow — and are looking at more of the same for this week. But we’re safe and warm and ready to go.
And speaking of going, 2024 is starting much as 2023 ended in our PLMish world.
Over the last few weeks, my most frequent request has been about the rumor that Synopsys is looking to acquire Ansys. I have no inside information (and wouldn’t share it if I did), but here’s the story so far: Neither company has confirmed or denied reports in the Wall Street Journal and other sources that Synopsys has offered a significant premium to recent closing prices to acquire Ansys, perhaps following on from a lower bid by Cadence. Three things:
1. All public companies are always for sale. One of the duties of a board of directors is to maximize shareholder value; if the company’s leadership believes that a sale will yield today’s shareholders a premium to what they paid for their shares, then they have to consider it. Of course, they don’t have to accept it if they think they can raise the share price in other ways.
2. Synopsys and Ansys (and Cadence and Ansys) already partner, but I don’t believe they cross-sell much, so the revenue would be additive, with the usual accounting adjustments if there’s an acquisition. There is also a bit of competitive overlap, which may cause some regulatory concerns. If either combination reduces competition and creates something that could be perceived as a monopoly, regulators might take notice.
3. Personal opinion: Ansys is so successful in part because it is agnostic; it tries to slot its simulation offerings into and around third-party products. It would be foolish of Synopsys (or Cadence) to restrict Ansys’ partnership with the other EDA powerhouse. We’ll have to see how this plays out — and it may amount to nothing if the offers aren’t better than what Ansys thinks it can do on its own.
Keeping to the theme of the acquisitions,
Cadence has acquired Invecas, makers of design engineering, embedded software, and system-level solutions. The purchase enables Cadence to offer custom solutions across chip design, product engineering, advanced packaging, and embedded software.
Keysight announced that the French Financial Markets Authority (AMF) approved its acquisition of ESI Group and that on 18 January 2024, Keysight will hold a total of 6,055,000 ESI Group shares — or 98.2% of the share capital and 96.4% of the theoretical voting rights of ESI Group. At that point, Keysight will initiate a “squeeze out” for the rest of the shares.
Addnode Group has been busy. It acquired Efficture, which makes forest and timber management solutions, and Jetas Quality Systems, a supplier of case management systems for issues and work orders within public transport and property management. Both are tiny add-ons — but interestingly enough, not in the VAR segments.
And, in case you thought it was over and done with, Nano Dimensions made another offer for Stratasys. A quick recap: Last Fall Stratasys turned down all offers from Nano Dimensions, 3D Systems and Desktop Metal and said it wanted to conduct a strategic review to look at its options. Apparently, it’s been turning a deaf ear to unsolicited offers during this process and Nano Dimensions was tired of being ignored, saying despite “[our] standing as the largest single shareholder of Stratasys, [our] current liquidity profile including over $800 million of net cash, and [our] publicly announced prior attempts to acquire Stratasys, Nano Dimension has not been approached by Stratasys or its representatives during Stratasys’ strategic alternatives assessment. To this end, a public press release announcing Nano Dimension’s intent is believed to be required.” Huff. Stratasys acknowledged receipt of the offer, but … crickets since then. For what it’s worth, Nano offered $25/share back in July 2023, and I’m not sure if 3D System’s last offer of $27/share is still on the table. This seems far from over.
Earnings start soon — and we’ll have a lot more detail about how Q4 ended 2023 and the outlook for 2024. My sense is that Q4 was decent and that 2024 estimates will start out conservative as everybody waits to see what happens in all the world’s hot-spots, and any economic fallout that might result.