The Testbench

$507 Million Reasons For Magma’s Run To End

On the heels of its quarterly earnings call today, Synopsys announced that it will acquire Magma Design Automation for the tidy sum of $507 million ($7.35 per share). Thus ends the ride for Magma, which, since its inception in 1997, had proved itself a more than worthy competitor in the RTL-to-GDSII design automation business.

Magma built its business on the strength of solid physical-design know-how. It also made a number of cagey acquisitions along the way that bolstered its ability to accurately correlate tool outputs with silicon. Its CEO, Rajeev Madhavan, may not have endeared himself to competitors Synopsys and Cadence Design Systems, but that was mostly because Madhavan competed fiercely, fiercely enough that by this year, Synopsys was feeling enough pressure from Magma on the Spice and timing-analysis fronts that it felt compelled to acquire its rival.

There had been rumors for some time that Magma was to be acquired. Rumors about Magma's acquisition aren't new, either, as long-time EDA observers know. I can recall when it seemed as though Mentor Graphics was about to make a move. With 20/20 hindsight, it's now easy to say that was a missed opportunity for Mentor to climb into the RTL-to-GDSII fray.

Now, Synopsys will acquire a company that nicely augments its existing capabilities in mixed-signal design and library characterization, both of which are critical pieces to success in the "big A" era. The combined forces of Synopsys and Magma are going to prove formidable to Cadence in terms of capturing hearts, minds, and seats. The acquisition is expected to close in the second quarter of 2012, but the companies will have their work cut out for them in the meantime, working through the integration of their workforces and capabilities and weeding out whatever duplication is deemed unnecessary.

By next spring, Magma can turn out the lights knowing that it had pretty much made all the points it set out to make. And then a new chapter will begin in which the competitive landscape will have changed significantly. It sure will be interesting to watch "Synagma" and Cadence slug it out.

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