CLOUD
ANSYS signs definitive agreement to acquire Ansoft
ANSYS and Ansoft announced today that they signed a definitive agreement whereby ANSYS will acquire Ansoft for a purchase price of approximately $832 million in a mix of cash and ANSYS common stock. The strategic, complementary business combination of ANSYS and Ansoft will create the leading provider of 'best-in-class' simulation capabilities, with combined trailing 12-month revenues of $485 million. When completed, ANSYS currently anticipates that the transaction will be modestly accretive to non-GAAP earnings per share in its first full year of combined operations. 
Under the terms of the definitive agreement, which was unanimously approved by the Boards of Directors of both companies, Ansoft stockholders will receive $16.25 in cash and 0.431882 shares of ANSYS common stock for each outstanding Ansoft share. Based on the 10-day trailing average closing price of ANSYS common stock, the implied value is $32.50 per Ansoft share. ANSYS will issue an aggregate of approximately 11.1 million shares of its common stock and pay an aggregate of approximately $416 million in cash in the transaction. ANSYS intends to fund the cash portion of the transaction with approximately $70 million of cash on-hand from the combined organization and approximately $346 million from the proceeds of a $450 million unsecured senior term loan credit facility. ANSYS' current lender, Bank of America, N.A., has committed to fully underwriting the credit facility and Banc of America Securities LLC has agreed to act as lead arranger. The pricing of the senior credit facility is tier-based with limited market flexibility on yields and structure to facilitate its syndication. The transaction, currently anticipated to close in the second calendar quarter of 2008, is subject to customary closing conditions, regulatory approvals and approval by the Ansoft stockholders. In connection with the execution of the definitive agreement, certain Ansoft stockholders, who collectively beneficially own approximately 16% of Ansoft, entered into voting agreements agreeing to vote for the proposed transaction. Upon the closing of the transaction, Ansoft stockholders will own approximately 12% of the combined company on a pro forma basis. After the closing, Ansoft will become a wholly-owned subsidiary of ANSYS and Ansoft common stock will cease trading on NASDAQ.
Ansoft is a leading developer of high-performance EDA software. The software is based on more than 25 years of research and development by world-renowned experts in electromagnetics, circuit and system simulation. Engineers use Ansoft products to simulate high-performance electronics designs found in mobile communication and Internet devices, broadband networking components and systems, integrated circuits, printed circuit boards and electromechanical systems. The company's products are used by blue chip companies as well as small- and medium-sized enterprises around the world.
The acquisition of Ansoft is ANSYS' first foray 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 combination 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 combination of Ansoft's and ANSYS' software products and services is expected to give ANSYS one of the most complete, independent engineering simulation software offerings in the industry, reaffirming and strengthening ANSYS' commitment to open interface and flexible simulation solutions that are primarily driven by customer demand, flexibility and choice. With over 40 direct sales offices and 21 development centers on three continents, the combined company will employ approximately 1,700 people.
"We are very excited about the state-of-the-art technologies that Ansoft adds to ANSYS' simulation capabilities," said James E. Cashman III, President and Chief Executive Officer of ANSYS. "Both companies have a strong commitment to their customers and employees, and share a passion for the development of innovative products and services and a history of world-class execution. This combination will further strengthen these values and will allow us to better serve our customers by accelerating the delivery of comprehensive, customer-driven engineering simulation solutions and by enabling us to provide high quality support throughout the world. We see this as an opportunity to add highly complementary physics that address the convergence of mechanical and electrical engineering product design and development. We are also excited about bringing two great Pittsburgh-based companies together to create an exciting opportunity for aspiring engineers, computer scientists and professionals to join us in our mission to democratize the use of simulation across the globe.
"The simulation technologies that Ansoft adds complement and broaden the existing ANSYS portfolio of simulation solutions, enabling the combined company to deliver the integration, efficiency, functionality and interoperability required by customers across a broad range of industries and applications. 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. Ansoft's solid revenue and customer base, combined with its profitability, should enable the transaction to be modestly accretive to non-GAAP earnings per share in our first full year of combined operations and accretive beyond that," stated Cashman.
"This merger brings together two great companies with a shared vision and strong engineering focus," said Dr. Zoltan J. Cendes, the founder, Chairman of the Board and Chief Technology Officer of Ansoft. "The combination of our R&D teams, complementary technological strengths and our commitment to quality will enhance our ability to deliver comprehensive, innovative, world-class simulation software technologies that customers demand." In conjunction with this transaction, Dr. Cendes will join ANSYS' Board of Directors following the closing of the transaction.
"The combination of Ansoft's extensive portfolio of electromagnetics, circuit and systems simulation solutions with ANSYS' existing simulation capabilities creates a 'best of breed' company that will continue to lead the evolution and innovation of engineering simulation by enabling customers to improve their product development processes, eliminate physical prototypes, reduce time-to-market for new products and improve product innovation and performance," said Nicholas Csendes, President and Chief Executive Officer of Ansoft.
Integration
The two Pittsburgh-based companies are developing integration plans that leverage and build on the cultural similarities and the best practices from each team. ANSYS will provide additional details relative to the acquisition and integration activities subsequent to the closing of the transaction.
Due to the absence at this time of estimates of the acquisition-related impact of purchase accounting adjustments, including the allocation of the purchase price among goodwill, in-process R&D, other intangibles and equity-based compensation expenses related to SFAS 123R, ANSYS is currently unable to provide GAAP estimates on future earnings. The company intends to provide updated GAAP and non-GAAP financial guidance after the closing of the transaction.
Advisors
In connection with the transaction, Deutsche Bank Securities Inc. is acting as exclusive financial advisor to Ansoft, and Wilson Sonsini Goodrich & Rosati, Professional Corporation is acting as legal counsel. Goodwin Procter LLP is acting as legal counsel to ANSYS.
Conference Call and Webcast
ANSYS will hold a conference call/webcast today to discuss this announcement. Please call in five to ten minutes before the start of the call to make sure you are able to access the slides and audio.
Conference Call Date: March 31, 2008
Time: 11:30 a.m. Eastern (8:30 a.m. Pacific)
Toll free Dial in #: (888) 811-5421 (US and Canada), (913) 312-6693
(International)
Passcode: 26797 or "ANSYS"
To view the slide presentation, paste the following link into your
browser:
Meeting URL: http://www.livemeeting.com/cc/vcc/join
Meeting ID: w9325734
Meeting Key: A932573
The call will be recorded and a replay will be available approximately two hours after the call ends. The replay will be available for one week by dialing 888-203-1112 or 719-457-0820 and the passcode is "ANSYS" or "26797." The archived webcast can be accessed, along with other financial information, on ANSYS' website at http://www.ansys.com/corporate/investors.asp. A presentation describing the transaction will be made available on the ANSYS website at www.ansys.com under the Investors tab.
Under the terms of the definitive agreement, which was unanimously approved by the Boards of Directors of both companies, Ansoft stockholders will receive $16.25 in cash and 0.431882 shares of ANSYS common stock for each outstanding Ansoft share. Based on the 10-day trailing average closing price of ANSYS common stock, the implied value is $32.50 per Ansoft share. ANSYS will issue an aggregate of approximately 11.1 million shares of its common stock and pay an aggregate of approximately $416 million in cash in the transaction. ANSYS intends to fund the cash portion of the transaction with approximately $70 million of cash on-hand from the combined organization and approximately $346 million from the proceeds of a $450 million unsecured senior term loan credit facility. ANSYS' current lender, Bank of America, N.A., has committed to fully underwriting the credit facility and Banc of America Securities LLC has agreed to act as lead arranger. The pricing of the senior credit facility is tier-based with limited market flexibility on yields and structure to facilitate its syndication. The transaction, currently anticipated to close in the second calendar quarter of 2008, is subject to customary closing conditions, regulatory approvals and approval by the Ansoft stockholders. In connection with the execution of the definitive agreement, certain Ansoft stockholders, who collectively beneficially own approximately 16% of Ansoft, entered into voting agreements agreeing to vote for the proposed transaction. Upon the closing of the transaction, Ansoft stockholders will own approximately 12% of the combined company on a pro forma basis. After the closing, Ansoft will become a wholly-owned subsidiary of ANSYS and Ansoft common stock will cease trading on NASDAQ.
Ansoft is a leading developer of high-performance EDA software. The software is based on more than 25 years of research and development by world-renowned experts in electromagnetics, circuit and system simulation. Engineers use Ansoft products to simulate high-performance electronics designs found in mobile communication and Internet devices, broadband networking components and systems, integrated circuits, printed circuit boards and electromechanical systems. The company's products are used by blue chip companies as well as small- and medium-sized enterprises around the world.
The acquisition of Ansoft is ANSYS' first foray 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 combination 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 combination of Ansoft's and ANSYS' software products and services is expected to give ANSYS one of the most complete, independent engineering simulation software offerings in the industry, reaffirming and strengthening ANSYS' commitment to open interface and flexible simulation solutions that are primarily driven by customer demand, flexibility and choice. With over 40 direct sales offices and 21 development centers on three continents, the combined company will employ approximately 1,700 people.
"We are very excited about the state-of-the-art technologies that Ansoft adds to ANSYS' simulation capabilities," said James E. Cashman III, President and Chief Executive Officer of ANSYS. "Both companies have a strong commitment to their customers and employees, and share a passion for the development of innovative products and services and a history of world-class execution. This combination will further strengthen these values and will allow us to better serve our customers by accelerating the delivery of comprehensive, customer-driven engineering simulation solutions and by enabling us to provide high quality support throughout the world. We see this as an opportunity to add highly complementary physics that address the convergence of mechanical and electrical engineering product design and development. We are also excited about bringing two great Pittsburgh-based companies together to create an exciting opportunity for aspiring engineers, computer scientists and professionals to join us in our mission to democratize the use of simulation across the globe.
"The simulation technologies that Ansoft adds complement and broaden the existing ANSYS portfolio of simulation solutions, enabling the combined company to deliver the integration, efficiency, functionality and interoperability required by customers across a broad range of industries and applications. 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. Ansoft's solid revenue and customer base, combined with its profitability, should enable the transaction to be modestly accretive to non-GAAP earnings per share in our first full year of combined operations and accretive beyond that," stated Cashman.
"This merger brings together two great companies with a shared vision and strong engineering focus," said Dr. Zoltan J. Cendes, the founder, Chairman of the Board and Chief Technology Officer of Ansoft. "The combination of our R&D teams, complementary technological strengths and our commitment to quality will enhance our ability to deliver comprehensive, innovative, world-class simulation software technologies that customers demand." In conjunction with this transaction, Dr. Cendes will join ANSYS' Board of Directors following the closing of the transaction.
"The combination of Ansoft's extensive portfolio of electromagnetics, circuit and systems simulation solutions with ANSYS' existing simulation capabilities creates a 'best of breed' company that will continue to lead the evolution and innovation of engineering simulation by enabling customers to improve their product development processes, eliminate physical prototypes, reduce time-to-market for new products and improve product innovation and performance," said Nicholas Csendes, President and Chief Executive Officer of Ansoft.
Integration
The two Pittsburgh-based companies are developing integration plans that leverage and build on the cultural similarities and the best practices from each team. ANSYS will provide additional details relative to the acquisition and integration activities subsequent to the closing of the transaction.
Due to the absence at this time of estimates of the acquisition-related impact of purchase accounting adjustments, including the allocation of the purchase price among goodwill, in-process R&D, other intangibles and equity-based compensation expenses related to SFAS 123R, ANSYS is currently unable to provide GAAP estimates on future earnings. The company intends to provide updated GAAP and non-GAAP financial guidance after the closing of the transaction.
Advisors
In connection with the transaction, Deutsche Bank Securities Inc. is acting as exclusive financial advisor to Ansoft, and Wilson Sonsini Goodrich & Rosati, Professional Corporation is acting as legal counsel. Goodwin Procter LLP is acting as legal counsel to ANSYS.
Conference Call and Webcast
ANSYS will hold a conference call/webcast today to discuss this announcement. Please call in five to ten minutes before the start of the call to make sure you are able to access the slides and audio.
Conference Call Date: March 31, 2008
Time: 11:30 a.m. Eastern (8:30 a.m. Pacific)
Toll free Dial in #: (888) 811-5421 (US and Canada), (913) 312-6693
(International)
Passcode: 26797 or "ANSYS"
To view the slide presentation, paste the following link into your
browser:
Meeting URL: http://www.livemeeting.com/cc/vcc/join
Meeting ID: w9325734
Meeting Key: A932573
The call will be recorded and a replay will be available approximately two hours after the call ends. The replay will be available for one week by dialing 888-203-1112 or 719-457-0820 and the passcode is "ANSYS" or "26797." The archived webcast can be accessed, along with other financial information, on ANSYS' website at http://www.ansys.com/corporate/investors.asp. A presentation describing the transaction will be made available on the ANSYS website at www.ansys.com under the Investors tab. 