The European Commission (EC) has given the green light for Synopsys to acquire Ansys, though the companies must sell off various software products as part of the proposed remedies.

Chip design software maker Synopsys revealed last January its plans to acquire Ansys, a simulation software developer that helps engineers model and analyze the physical behavior of products, such as chips, and evaluate their real-world performance.

The $35 billion transaction, involving two publicly traded companies, is the biggest such deal in the technology sector since Broadcom acquired VMware for $69 billion. That merger also attracted regulatory scrutiny and was finally passed by the EC in July 2023 after the parties agreed to commitments around continued access and interoperability.

The crux of the issue, as far as regulators are concerned, is that such a merger would create a comprehensive chip design and simulation giant that could stifle competitors that don’t offer such a combination. And so the EC now says that the firms will sell overlapping parts of their businesses to a “suitable purchaser” approved by the EC.

Synopsys had already reached an agreement to sell its Optical Solutions Group to Keysight, but now it will also sell its optics and photonics software such as Code V, LightTools, LucidShape, RSoft, and ImSym. Ansys will also divest PowerArtist, software that can analyze and optimize the power consumption of electronic circuits at a very granular level.

“We were concerned that this acquisition may have significantly harmed competition in certain global markets for design software for chips or other products,” Teresa Ribera, the European Commission’s executive vice president for clean, just, and competitive transition, said in a statement. “However, thanks to the clear structural remedies offered by the parties, competition in these markets will be preserved and customers will continue to have access to innovative tools at competitive prices.”

Approvals

The U.K. Competition and Markets Authority (CMA) launched its own antitrust investigation into the transaction back in August, and earlier this week the CMA indicated that it was willing to accept the proposed divestment offer too.

But today’s announcement doesn’t necessarily mean the deal is done and dusted. The Federal Trade Commission (FTC) had also been looking at the proposed merger, while both Synopsys and Ansys have significant ties to China, too — and the country’s State Administration for Market Regulation (SAMR) was reportedly seeking remedies.

A Synopsys spokesperson confirmed that it’s still “working cooperatively with the FTC” as it considers the remedies, while it also continues to work with other markets around the world — including China.

“We are very pleased that the EC has approved our pro-competitive transaction in Phase 1,” the spokesperson said. “Today’s clearance decision follows the strong progress we have made toward gaining regulatory approval across various jurisdictions. China SAMR has officially accepted our filing, and its review is in process. In addition, we continue to work with the regulators in other relevant jurisdictions to conclude their reviews.”

The spokesperson added that it expects the transaction to close in the first half of 2025.

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