Ansys To Buy EDA Software Maker Ansoft For About $832 Mln Cash And Stock

long.yang

3/31/2008 7:01:23 AM Monday, Ansys, Inc. (ANSS), a provider of engineering simulation software, said it agreed to acquire Ansoft Corp. (ANST), a maker of Electronic Design Automation software, for about $832 million in a cash and stock deal.

The Pittsburgh, Pennsylvania-based Ansoft is a leading developer of Electronic Design Automation, or EDA, software. Through the acquisition of Ansoft, Ansys would make its debut into the broader EDA software industry and will enhance the breadth, functionality, usability and interoperability of the combined Ansys portfolio of engineering simulation solutions.

The business combination is expected to create a leading provider of 'best-in-class' simulation capabilities, with combined trailing 12-month revenues of $485 million.

Commenting on the deal, Ansys CEO, James Cashman, said, “With trailing 12-month revenues ending January 31, 2008 of $98 million, Ansoft brings a combination of new software revenue growth and strong operating margins.”

Upon closing, Ansys currently expects the deal to be modestly accretive to non-GAAP earnings per share in its first full year of combined operations and accretive beyond that. Subject to customary closing conditions, the transaction is anticipated to close in the second calendar quarter of 2008.

As per the terms of the agreement, for each share, Ansoft stockholders will receive $16.25 in cash and 0.431882 shares of Ansys common stock. Based on the 10-day trailing average closing price of Ansys common stock, the implied value is $32.50 per Ansoft share. Under the deal, the Canonsburg, Pennsylvania-based Ansys will issue about 11.1 million common shares and pay approximately $416 million.

Related to this deal, certain Ansoft stockholders, who collectively beneficially own about 16% of Ansoft, agreed to vote in favor of the transaction. Upon the closing of the transaction, Ansoft stockholders is expected to own about 12% of the combined company on a pro forma basis.

Ansys plans to fund the cash portion of the deal with approximately $70 million of cash on-hand from the combined organization and about $346 million from the proceeds of a $450 million unsecured senior term loan credit facility. Ansys ' current lender, Bank of America, N.A. (BAC), has committed to fully underwriting the credit facility and Banc of America Securities LLC has agreed to act as lead arranger.

Engineers use Ansoft products to simulate high-performance electronics designs found in mobile communication and Internet devices, broadband networking components and systems etc. Ansoft's products are used by blue chip companies as well as small- and medium-sized enterprises around the world.

The merger is expected to increase operational efficiency and lower design and engineering costs for customers, and accelerate development and delivery of new and innovative products to the marketplace. The complementary product nature of both companies is expected to give Ansys one of the most complete, independent engineering simulation software offerings in the industry. With over 40 direct sales offices and 21 development centers on three continents, the combined company is expected to employ approximately 1,700 people.

In connection with the transaction, Deutsche Bank Securities Inc. is acting as exclusive financial advisor to Ansoft, and Wilson Sonsini Goodrich & Rosati, Professional Corp. is acting as legal counsel. Goodwin Procter LLP is acting as legal counsel to Ansys.

Shares of Ansys closed Friday's regular trading at $37.92, while Ansoft shares ended Friday's trading at $23.42.