01 December 2011

Will eda acquisition benefit chip designers or investors?

Magma has been nipping at the heels of the leading eda companies for some time, driven by the unique style of its founder Rajeev Madhavan.

But it appears the competition might have got a bit too hot. Synopsys' chairman and ceo Aart de Geus is spending more than $500million in cash to buy out the competition.
EDA companies are no strangers to acquisition; in some respects, they paved the way for today's corporate deals by performing their R&D through buying start ups. But deals such as this are much rarer.
Veteran eda industry watcher John Cooley has this to say: "My hat is off to Rajeev on this deal. From what my readers have been saying for the last 12 months on DeepChip, it's obvious that Lava [Magma's NASDAQ ticker symbol] has been taking a painful chunk out of [Synopsys'] Spice sales. Aart had to buy them to stop this."
Magma reported sales of $139million for its last financial year, which ended on 1 May 2011.
There are the usual corporate statements justifying the deal, which has been, we are told, approved unanimously by both boards of directors. But the bottom line is whether taking competition out of the market will be good for chip designers or better for investors.

Author
Graham Pitcher

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