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ANSYS (ANSS) Set to Takeover Zemax: Major Takeaways

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ANSYS ANSS recently inked an agreement with EQT Private Equity to acquire Zemax, LLC. The acquisition, subject to regulatory and customary approvals, is expected to be concluded in fourth-quarter 2021. Terms of the transaction have not been divulged.

Zemax is engaged in providing imaging simulation and optimization software technologies to companies in verticals like life sciences & research, aerospace and defense, manufacturing as well as consumer electronics and communications.

Zemax’s products include OpticStudio (optical design software), OpticStudio STAR Module, OpticsBuilder and OpticsViewer. The company is based in Kirkland and offices in Taiwan, China, Japan and the U.K.

The acquisition will help ANSYS in offering its customers with complete set of solutions for simulating complex optical- and photonics-powered products. The broad portfolio of solutions will enable customers to quickly create optimal designs by modernizing the workflow and improving communication among optical, photonics, mechanical and manufacturing engineers. It will also reduce time to market for such optical products, added ANSYS.

The acquisition of Zemax is unlikely to have any material impact on the financials for 2021, noted ANSYS.

ANSYS, Inc. Price and Consensus

ANSYS, Inc. Price and Consensus
ANSYS, Inc. Price and Consensus

ANSYS, Inc. price-consensus-chart | ANSYS, Inc. Quote

Acquisitions Have Boosted ANSYS Business

Acquisition of Zemax, which is a dominant player in the optical imaging and optical design software market, will provide ANSYS with a competitive edge in the optical design software domain.

Higher demand for improved modeling and analysis of optical systems in aerospace, photonics and microlithography applications is the main catalyst driving the optical design software market as per a report from Data Insights Partner. The market is also being driven by the adoption of advanced technologies for various applications as well as cloud and edge computing.

ANSYS’ acquisition strategy has played a crucial role in boosting growth trajectory in the last few years. Tuck-in purchases have expanded the company’s product portfolio and boosted its capabilities in providing high-end design simulation software.

Recently, the company announced the takeover of Phoenix Integration for an undisclosed amount. Phoenix is a software-maker specializing in model-based engineering (MBE) and model-based systems engineering (MBSE).

Last year, ANSYS acquired Analytical Graphics, Inc for $700 million. Analytical Graphics is engaged in providing modeling, analysis and simulation software solutions for telecommunications, defense and aerospace verticals. Analytical Graphics will boost the company’s presence in the digital mission engineering space which includes critical missions like satellite launches.

In 2020, the company concluded the acquisition of Lumerical Inc, which is engaged in the development of silicon photonic design and simulation solutions.

Some other notable acquisitions in the past include Dynardo, Livermore Software Technology Corporation (“LSTC”), Granta, Helic, OPTIS, 3DSIM and CLK Design Automation among others.

Though acquisitions have enabled the company to expand product portfolio these have negatively impacted the company’s balance sheet in the form of high level of goodwill and intangible assets, which totaled approximately $3.8 billion or 64.5% of total assets as of Jun 30, 2021.

In the past year, shares of ANSYS have returned 6.4% compared with the industry’s rally of 27.3%.

Zacks Rank & Key Picks

ANSYS currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Avnet AVT, Paycom Software PAYC and Silicon Motion Technology SIMO. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Long-term earnings growth rate of Avnet, Paycom and Silicon Motion is pegged at 25.4%, 25% and 8%, respectively.

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Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report

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