Highlights:
- Transaction will establish the Software Integrity Group as a
newly independent, leading application security testing software
provider.
- The transaction, valued at up to $2.1
billion, is expected to close in the second half of 2024,
subject to customary closing conditions including the receipt of
required regulatory approvals.
- Synopsys sharpens focus on accelerating its silicon to systems
strategy and advancing its core design automation and design IP
businesses.
SUNNYVALE, Calif., May 6, 2024
/PRNewswire/ -- Synopsys, Inc. (NASDAQ: SNPS) today announced
it has entered into a definitive agreement with Clearlake Capital
Group, L.P. ("Clearlake") and
Francisco Partners, two global private equity firms, for the sale
of its Software Integrity Group business in a transaction with a
total value of up to $2.1 billion,
including up to $475 million in cash
payable upon Francisco Partners and Clearlake achieving a specified rate of return
in connection with one or more liquidity transactions. Upon
completion of the transaction, the business will emerge as a newly
independent application security testing software provider.
The existing Software Integrity Group management team is
expected to lead the newly independent, privately held company
after the transaction closes. The name of the new standalone entity
will be announced at a later date. Synopsys is committed to a
seamless transition for the Software Integrity Group team,
customers, and partners.
"Clearlake and Francisco
Partners have a strong track record of success investing in growing
software platforms and are ideal partners to continue growing this
business as an independent, world-class software security
provider," said Sassine Ghazi,
president and CEO of Synopsys. "For Synopsys, this move sharpens
our focus on the unprecedented, high-growth opportunity we have in
our core business – where the engineering of silicon and systems is
converging as technology R&D teams look to capitalize on this
AI-driven era of pervasive intelligence."
"We are excited to partner with Synopsys to complete the
carve-out of its Software Integrity Group, a leading provider of
application security testing solutions," said Dipanjan "DJ" Deb,
Co-Founder and CEO of Francisco Partners. "Francisco Partners has a
long history of working with leading technology companies to
carve-out divisions and business units that can benefit from
greater focus and flexibility as standalone entities, and where our
Francisco Partners Consulting operating team can bring resources
and expertise to help accelerate growth."
"As security becomes more embedded in DevOps workflows, we
believe the demand and importance of application security testing
providers will continue to rise," said Behdad Eghbali, Co-Founder and Managing Partner
of Clearlake. "We are ready to
leverage Clearlake's
O.P.S.® framework to foster operational
enhancements, build upon the Software Integrity Group's robust
product offering, and fuel new growth as a standalone
enterprise."
"Advancements in generative artificial intelligence technology
are likely to disrupt the software development lifecycle over time,
increasing the velocity of code generation and introducing new
forms of software risk. The Software Integrity Group's strong
portfolio of application security testing products provides
enterprise customers with tools that integrate security into
developer's workflows. This ensures developers can create high
quality, secure and compliant code that minimizes cybersecurity
risks, including risks arising from generative artificial
intelligence, and directly addressing a growing need in the
market," said Prashant Mehrotra,
Partner, and Sean Courtney,
Principal, at Clearlake.
"Enterprise engineering and security teams face an increasingly
dynamic and challenging threat environment today, and ensuring the
quality and security of their software applications has become a
top strategic priority. Synopsys' Software Integrity Group is a
leader in application security testing solutions, providing a
comprehensive platform for software engineers and security teams to
secure and protect their mission-critical software applications,"
said Brian Decker and Evan Daar, Partners at Francisco Partners. "We
look forward to working with the leadership team at the Software
Integrity Group to accelerate growth and innovation as a standalone
company."
Synopsys' Software Integrity Group provides integrated software
solutions that transform the way development teams build and
deliver software, accelerating innovation while addressing business
risk. Its comprehensive, industry-leading portfolio of software
security products interoperates with third-party and open-source
tools, allowing organizations to leverage existing investments to
build the security program that is best for them.
The transaction, which was unanimously approved by Synopsys'
Board of Directors, is currently expected to close in the second
half of 2024, subject to customary closing conditions including the
receipt of required regulatory approvals.
Advisors
J.P. Morgan served as financial advisor and Cleary Gottlieb Steen & Hamilton served as
legal advisor to Synopsys. Evercore, Deutsche Bank, and Barclays
acted as financial advisors to Clearlake and Francisco Partners. Sidley Austin acted as lead legal advisor to
Clearlake and Francisco Partners.
Simpson Thacher & Bartlett also advised Francisco Partners.
About Synopsys
Catalyzing the era of pervasive intelligence, Synopsys, Inc.
(Nasdaq: SNPS) delivers trusted and comprehensive silicon to
systems design solutions, from electronic design automation to
silicon IP and system verification and validation. We partner
closely with semiconductor and systems customers across a wide
range of industries to maximize their R&D capability and
productivity, powering innovation today that ignites the ingenuity
of tomorrow. Learn more at www.synopsys.com.
About Clearlake
Founded in 2006, Clearlake is
an investment firm operating integrated businesses across private
equity, credit, and other related strategies. With a sector-focused
approach, the firm seeks to partner with experienced management
teams by providing patient, long term capital to dynamic businesses
that can benefit from Clearlake's
operational improvement approach, O.P.S.®
The firm's core target sectors are technology, industrials, and
consumer. Clearlake currently has
over $75 billion of assets under
management, and its senior investment principals have led or co-led
over 400 investments. The firm is headquartered in Santa Monica, CA with affiliates in
Dallas, TX, London, UK, Dublin,
Ireland, and Singapore.
Learn more at www.clearlake.com.
About Francisco Partners
Francisco Partners is a leading global investment firm that
specializes in partnering with technology and technology-enabled
businesses. Since its launch nearly 25 years ago, Francisco
Partners has invested in more than 400 technology companies, making
it one of the most active and longstanding investors in the
technology industry. With approximately $45
billion in capital raised to date, the firm invests in
opportunities where its deep sectoral knowledge and operational
expertise can help companies realize their full potential. Learn
more at www.franciscopartners.com.
Synopsys Contacts:
Trey Campbell
Investor Relations
synopsys-ir@synopsys.com
Cara Walker
Media Relations
corp-pr@synopsys.com
PE Contacts:
CLEARLAKE
Jennifer Hurson Lambert
jhurson@lambert.com
FRANCISCO PARTNERS
Whit Clay / Jake Cohen
Sloane & Company
wclay@sloanepr.com / jcohen@sloanepr.com
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains certain forward-looking statements
within the meaning of the federal securities laws with respect to
the proposed transaction, including, but not limited to, statements
regarding the proposed transaction, the anticipated timing of the
closing thereof and the post-closing transition of the Software
Integrity Group, and its customers and partners; the market
outlook, products and business of Synopsys and the new standalone
company following the transaction, and the benefits of and costs
from the transaction to Synopsys and the new standalone company;
the total consideration (including the portion of the purchase
price payable upon Francisco Partners and Clearlake Capital
achieving a specified rate of return in connection with one or more
liquidity transactions) and the potential financing for the
transaction; Synopsys' and the new standalone company's
expectations and objectives; strategies related to Synopsys' and
the new standalone company's products, technology and services;
trends, opportunities, strategies and technological trends, such as
artificial intelligence; and customer demand and market expansion
of each of Synopsys and the new standalone company. These
forward-looking statements generally are identified by the words
"believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should,"
"will," "would," "will be," "will continue," "will likely result,"
and similar expressions or the negatives of these words or other
comparable terminology to convey uncertainty of future events or
outcomes. Forward-looking statements are predictions, projections
and other statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties.
Many risks, uncertainties and other factors could cause actual
future events to differ materially from those expressed or implied
in forward-looking statements in this press release, including, but
not limited to: (i) the completion of the proposed transaction on
anticipated terms and timing, future capital expenditures,
revenues, expenses, earnings, economic performance, indebtedness,
financial condition, losses, pricing trends, future prospects,
credit ratings, business and management strategies that may
adversely affect each of Synopsys' and the new standalone company's
business, financial condition, operating results, (ii) the failure
to satisfy the conditions to the consummation of the proposed
transaction, including the receipt of certain governmental and
regulatory approvals on the terms expected, in a timely manner, or
at all, (iii) the risk that such regulatory approvals may result in
the imposition of conditions that could adversely affect, following
completion of the proposed transaction (if completed), Synopsys or
the new standalone company or the expected benefits of the proposed
transaction, (iv) uncertainties as to Clearlake and Francisco Partners' access to
available financing to consummate the proposed transaction upon
acceptable terms and on a timely basis, or at all, (v) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the equity purchase agreement, (vi)
the effect of the announcement or pendency of the proposed
transaction on Synopsys' business relationships, competition,
business, financial condition, and operating results, (vii) risks
that the proposed transaction disrupts current plans and operations
of Synopsys and the ability of Synopsys to retain and hire key
personnel, (viii) risks related to diverting the attention of
Synopsys' management team from the ongoing business operations of
Synopsys or Synopsys' pending acquisition of ANSYS, Inc., (ix) the
outcome of any legal proceedings that may be instituted against
Synopsys related to the proposed transaction, (x) the ability of
Synopsys to implement its plans, forecasts, expected financial
performance and other expectations with respect to its business
after the completion of the proposed transaction and realize the
benefits expected from the proposed transaction (if completed),
(xi) risks associated with third party contracts containing consent
and/or other provisions that may be triggered by the proposed
transaction, (xii) uncertainty in the macroeconomic and
geopolitical environment and its potential impact on the
semiconductor and electronics industries, (xiii) uncertainty in the
growth of the semiconductor, electronics and artificial
intelligence industries, (xiv) the highly competitive industry
Synopsys operates in, (xv) actions by the U.S. or foreign
governments, such as the imposition of additional export
restrictions or tariffs, (xvi) consolidation among Synopsys'
customers and its dependence on a relatively small number of large
customers, (xvii) legislative, regulatory and economic developments
affecting Synopsys' business, (xviii) the evolving legal,
regulatory and tax regimes under which Synopsys operates, and (xix)
restrictions during the pendency of the proposed transaction that
may impact Synopsys' ability to pursue certain business
opportunities or strategic transactions.
Additional information on potential risks, uncertainties and
other factors that could affect Synopsys' results is included in
filings we make with the SEC from time to time, including in the
sections entitled "Risk Factors" in Synopsys' latest Annual Report
on Form 10-K and in its latest Quarterly Report on Form 10-Q. The
information provided herein is as of May 6,
2024. Synopsys undertakes no duty to, and does not intend
to, update any forward-looking statement, whether as a result of
new information, future events or otherwise, unless required by
law.
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SOURCE Synopsys, Inc.