By Edith Hancock

The U.K. Competition and Markets Authority said it would launch an in-depth probe into Synopsys' $35 billion acquisition of Ansys, unless the chip-sector companies can offer a deal that eases the regulator's concerns.

The CMA said Friday that Synopsys' purchase of Ansys could reduce competition for semiconductor chip design and light simulation products in the U.K.

"Synopsys and Ansys are important suppliers of semiconductor chip design and light simulation software, and we're concerned that this deal could reduce innovation and lead to higher prices for these products in the U.K.," Naomi Burgoyne, the CMA's senior director of mergers, said. She said millions of businesses and consumers use products that rely on the companies' software systems in a broad swathe of devices like medical equipment, smart cars or in fast-growing artificial-intelligence services.

Sunnyvale, Calif.-based chip design software maker Synopsys agreed to buy Ansys in January with the deal approved by its shareholders in May. The deal would create a new design-software company that extends Synopsys' reach in simulation software for designers of microchips, cars and airplanes.

The CMA's in-depth probes can take roughly 24 weeks but can drag on longer in extenuating circumstances. That can sometimes lead to companies walking away from a deal if there is too much uncertainty.

The U.K. regulator said it would be open to remedies that address its concerns. Synopsys has already offered to sell off one of its own business units and one of Ansys' to stave off a full in-depth investigation from the European Commission, according to Reuters. The companies expect to close their deal in the first half of 2025.

A spokesperson for Synopsys said the decision was an expected step in the U.K. regulatory process and the company previously announced plans to sell its Optical Solutions business to Keysight if the transaction goes ahead. "We will continue our constructive and collaborative engagement with the CMA in relation to our proposed remedies," it said.

Ansys didn't immediately respond to a request for comment.

Write to Edith Hancock at edith.hancock@wsj.com

(END) Dow Jones Newswires

December 20, 2024 06:59 ET (11:59 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.