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The Federal Trade Commission (FTC) has issued an order requiring Synopsys Inc. and Ansys Inc. to divest key software assets as a condition for proceeding with their proposed $35 billion merger. This move comes as part of the agency’s efforts to protect competition and prevent higher costs across critical technology markets.

The FTC order mandates that Synopsys divest its optical software tools and photonic software tools, while Ansys must divest its PowerArtist tool, a product used for analyzing and optimizing power consumption in digital chips. The assets will be acquired by Keysight Technologies Inc., ensuring continued competition in the affected markets.

"The FTC’s action today ensures that this high-value merger will not come at the expense of consumers and innovation," said Daniel Guarnera, Director of the FTC’s Bureau of Competition. "By requiring these divestitures, we are preserving access to essential software tools that support the development of semiconductors, fiber optic technologies, LED screens, and other vital components of modern electronics."

The divestitures address concerns in three specific markets:

• Optical software tools

• Photonic software tools

• Register transfer level (RTL) power consumption analysis tools

The FTC’s consent order stipulates that the companies must complete the divestitures within 10 days of the merger’s closing. Synopsys and Ansys are also required to provide limited transition services and technological support to Keysight to ensure a smooth and immediate market entry.

The $35B Synopsys-Ansys merger was originally announced in January 2024, with Ansys shareholders set to receive $197 in cash and 0.345 shares of Synopsys stock per Ansys share. The companies highlighted their complementary strengths and collaborative history in software innovation, but the FTC launched an in-depth investigation due to potential anticompetitive risks.

Regulatory bodies in Europe and the United Kingdom have also reviewed and conditionally approved the transaction, contingent on similar divestiture requirements. According to Teresa Ribera, Executive Vice President of the European Commission, “The remedies offered by the parties preserve competition and ensure access to innovative tools at competitive prices.”

The FTC’s decision reinforces its commitment to fair competition in the technology sector and sets the stage for the merger to proceed under conditions that safeguard consumer interests.