Synopsys Spins Off App Security Unit In $2.1bn Deal

Silicon Valley chip-design tools firm Synopsys is to sell its Software Integrity Group (SIG) unit to a private equity consortium led by Clearlake Capital and Francisco Partners in a deal worth up to $2.1 billion (£1.7bn),the company said.

The deal includes up to $475m in cash payable upon the two private equity companies achieving a specified rate of return in connection with one or more liquidity transactions, the firm said.

Liquidity transactions are deals in which holders of a company’s stock can sell their shares.

Synopsys is also to receive $1.5bn on closure of the deal and $125m over a period of five quarters.

Shift in focus

Following the completion of the deal the software integrity group is to be established as an independent provider of application security testing software.

Synopsys said the name of the new group would be announced later on.

The unit, which provides application security testing software for developers, has been considered a drag on profit growth at Synopsys in recent years, Piper Sandler analysts wrote in April.

Chief executive officer Sassine Ghazi said in a statement the deal would allow Mountain View, California-based Synopsys to focus on its core business of providing semiconductor design tools.

App security

The announcement comes three months after Synopsys agreed to buy engineering software maker Ansys for about $34bn in one of the tech industry’s biggest deals in recent years and Synopsys’ biggest-ever acquisition.

Existing management of the software integrity group is expected to lead the new independent company, according to Synopsys.

The spin-off is expected to close in the second half of the year.

Ghazi said during the company’s earnings call in November that the company was exploring strategic alternatives for the software integrity unit.