Friday, May 14, 2010

Will Cadence Take Away the Punch Bowl?

Big news in the world of EDA business this week, with Cadence to buy Denali for $315 million.

Though as an implementation guy, I don't use Denali products, the first things that sprang to mind are:

  • $315 million is a lot of money! I think it must be one of the top 10 EDA acquisitions by price, if not top five. Anyone have list of the top acquisitions in EDA? It'd be fascinating to review the list and how those deals turned out.

    Off the top of my head guess list of bigger deals: CCT (Cadence), Ambit (Cadence), Avant! (Synopsys). Maybe ViewLogic (Synopsys), Verisity (Cadence).

  • Cadence has been ambivalent or downright antagonistic toward the Design Automation Conference (DAC) in the past few years. Denali, on the other hand, is one of DAC's biggest boosters, and throws the party to attend in all of DAC. It will be tragic if Cadence clamps down on the festivities.

On a more somber note, let's hope that Cadence is able to preserve the technology and brain trust that was able to make Denali a well-established mid-level EDA vendor. Cadence has had mixed success in managing acquisitions, with some apparently not paying off (Ambit) and others holding up well (Verplex).


Philippe Faes said...

Hi John,

You probably should not compare this transaction to any acquisitions more than five years ago, and especially not to transaction of ten years ago. Even though the numbers may be interesting, those were different days. There is not much hope to reach the crazy valuations we have seen before 2000.

To my knowledge, the Denali acquisition is THE largest in our industry in the last five years. Second in line is Symplicity (Synopsys) in 2008 with $223M. Three and four are Nassda an ISE, acquirede by Synopsys for 200M and 100M respectively.

Of course, there have been a few deals in 2010 for which the details have not been announced yet: VaST, CoWare, Gemini have been acquired by Synopsys and Taray by Cadence. However, I don't think that these deals will challenge the Denali's number-one position.

Congrats to the folks at Denali.


Sean Murphy said...

Cadence stock is down about 15% from May 3 to May 24, and down about 6% from the announcement May 13to May 24 so the market does not seem to be taking it as a positive.

My take is that there may be synergies that we cannot appreciate but that there were probably other bidders that drove the price up and Cadence may look back in a year or two and realize that they overpaid.