Cadence Focuses on Acquisitions to Supplement Organic Growth

Cadence Design Systems, Inc. CDNS continues to enhance its business through strategic and tuck-in acquisitions. Acquisitions provide valuable tools, technologies and market access that accelerate and amplify organic growth. This strategy broadens a company’s product offerings without having to develop them from scratch. Acquiring companies with strong research and development capabilities allows an organization to speed up its innovation process. Buyouts aid in obtaining synergies, leading to cost reduction and enhanced operational efficiency through the integration of resources.  Looking at CDNS’ Recent AcquisitionsIn January 2025, Cadence, a leader in the electronic design automation (“EDA”) space, inked a definitive agreement to acquire Secure-IC, a premium provider of embedded security IP platforms. The transaction is expected to close in the first half of 2025, subject to regulatory approvals and customary closing conditions.The buyout will enable the company to enhance its capabilities in delivering cutting-edge security solutions for complex system-on-chips and silicon solutions across diverse industries. Secure-IC’s expertise, proven portfolio and track record of more than 500 successful projects globally are likely to complement Cadence’s existing offerings, driving innovation and addressing the growing complexities of embedded cybersecurity in connected systems. Cadence’s existing portfolio, which includes silicon-proven IP such as interface IP, memory, artificial intelligence/ machine learning and digital signal processing solutions, will significantly benefit from Secure-IC’s security offerings.Previously, Cadence completed the acquisition of Switzerland-based BETA CAE, a leading provider of engineering simulation solutions. This acquisition will enhance Cadence's Intelligent System Design strategy by broadening multiphysics system analysis offerings and helping it enter into the structural analysis sector. In January 2024, the company purchased California-based embedded software and system-level solutions provider Invecas, IncOther Notable CDNS AcquistionsThe acquisition of Intrinsix (September 2023) further expanded Cadence’s footprint in the advanced nodes, radio frequency, mixed signal and security algorithms. CDNS purchased the SerDes and memory interface PHY IP business from Rambus in September 2023.  In 2022, the company acquired OpenEye Scientific Software, Future Facilities, Pointwise and NUMECA. CDNS acquired OpenEye Scientific Software to augment its pharmaceutical and biotechnology market reach.The buyouts of Future Facilities, Pointwise and NUMECA have aided in increasing the system analysis portfolio with more CFD solutions. The other significant acquisitions made by the company include Integrand Software, AWR Corporation, Tensilica and InspectAR Augmented Interfaces. Acquisition Strategy’s DrawbacksOverall, while buyouts can be a sound strategy, they come with their own set of drawbacks, like integration challenges. Acquisitions affect the balance sheet in the form of high levels of goodwill and intangible assets, adding to the risk of investing in the company. The company’s goodwill and intangible assets totaled $2.973 billion or 33.1% of total assets as of Dec. 31, 2024.Acquisition Strategies of CDNS’ Peers The pending acquisition of ANSYS ANSS by Synopsys SNPS is likely to escalate competition in the EDA space for all players, including Cadence and Keysight Technologies KEYS.  In January 2024, Synopsys announced a definitive agreement to acquire ANSYS in a deal valued at $35 billion. This deal reflects an implied per-share consideration of $390.19 and represents a premium of about 29% over Ansys' closing stock price on Dec. 21, 2023. In May 2024, Ansys announced that its shareholders voted to approve the proposed acquisition by Synopsys.The deal has received conditional approval from the European Commission, with the U.K. Competition and Markets Authority provisionally accepting proposed remedies. China’s State Administration for Market Regulation is reviewing the filing and regulatory approvals in other jurisdictions are in progress. The transaction is expected to close in the first half of 2025, pending regulatory clearance and customary conditions. Due to the pending acquisition, Ansys has suspended earnings calls and stopped providing financial guidance.Synopsys’ acquisition of ANSYS is poised to produce a synergistic powerhouse that is likely to revolutionize semiconductor design and testing processes, ushering in a holistic approach to innovation.To stay competitive amid changing industry dynamics, Keysight Technologies, a leading provider of electronic design and test instrumentation systems, is focused on inorganic expansion. In September 2024, it acquired Synopsys’ Optical Solutions Group. The business focuses on developing optical design and analysis software tools. This transaction is expected to close in the first half of 2025, subject to customary closing conditions and the successful closing of Synopsys’ pending buyout of Ansys.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Synopsys, Inc. (SNPS): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report ANSYS, Inc. (ANSS): Free Stock Analysis Report Keysight Technologies Inc. (KEYS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks