FTC, shareholders OK Synopsys' acquisition of Avanti

SAN MATEO, Calif.—The merger between design automation giants Synopsys Inc. and Avanti Corp. was approved Tuesday (June 4) by the stockholders of both companies and by the Federal Trade Commission.

The companies must only complete some paperwork to finalize the deal, and that should happen in the next few days, a Synopsys spokesman said.

Separately on Tuesday, Cadence Design Systems Inc. announced that its acquisition of Simplex Solutions Inc. has received antitrust approval.

The acquisition of Avanti, a dominant supplier of physical implementation tools, by Synopsys, a leading logic synthesis supplier, makes the combined company a strong contender for the top spot in the EDA industry.

With the acquisition, Synopsys also inherits a high-profile legal battle, which may have been a factor in the FTC's slowness in approving the merger. By allowed the waiting period required for a merger by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 to expire, the FTC's inaction approved the deal.

Avanti and several of its former executives are being sued in civil court by Cadence, the EDA industry's largest company, for theft of Cadence source code in the early 1980s. Last year Avanti and the former executives, including Gerald Hsu, who was then president and chief executive officer of Avanti, pleaded no contest to criminal charges surrounding the case. The company, Hsu, and various former employees had to pay Cadence a total of $195 million in criminal restitution. In the pending civil case, Cadence is seeking over a $1 billion in damages.

In preparation for its acquisition of Avanti, Synopsys took out $500 million in litigation insurance, for a premium of $335 million, in case it is legally required to pay civil damages to Cadence.

Synopsys will hold an earnings conference call for the second fiscal quarter later Tuesday, when it will give guidance for the merged companies.

The Cadence and Simplex merger is still awaiting shareholder approval, but the companies released a statement Tuesday stating they expect the deal to close shortly.