Synopsys, Ansys deal seen accretive to adjusted EPS within year two post close

Synopsys’ total addressable market is expected to increase by 1.5x to approximately $28B. This combined TAM is expected to grow at roughly an 11% CAGR, driven by megatrends accelerating the need for the fusion of electronics and physics across industries. The combination is expected to strengthen Synopsys’ financial profile. The combined company expects to continue its industry-leading, double-digit growth, which is expected to outpace TAM growth. The combination is expected to expand Synopsys’ non-GAAP operating margin by approximately 125 basis points and unlevered free cash flow margins by approximately 75 basis points the first full year post-closing. The combination is expected to be accretive to non-GAAP EPS within the second full year post-closing and substantially accretive thereafter. The combined company is expected to generate substantial and sustained free cash flow, which will enable rapid de-leveraging to less than 2x debt to Adjusted EBITDA within two years post-closing, with a long-term leverage target of less than 1x. Synopsys expects to maintain investment grade credit ratings given its strong cash flow generation and commitment to rapidly de-lever. The combined company expects to achieve approximately $400M of run-rate cost synergies by year three post-closing and approximately $400M of run-rate revenue synergies by year four post-closing, growing to more than approximately $1B annually in the longer-term.