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Synopsys acquires Coverity and enters security market(M2 PressWIRE Via Acquire Media NewsEdge) San Francisco, Ca - Synopsys, Inc., a global leader providing software, IP and services used to accelerate innovation in chips and electronic systems, and Coverity, the leading provider of software quality, testing, and security tools, have just signed a definitive agreement for Synopsys to acquire Coverity. Coverity products reduce the risk of quality and security defects, which can lead to the catastrophic failures that plague many of today's large software systems. Under the terms of the definitive agreement, Synopsys will pay approximately $375 million, or $350 million net of cash acquired. In addition, Synopsys will assume certain unvested stock options of Coverity employees. The transaction will be funded by Synopsys with a combination of U.S. cash and debt, and is subject to Hart Scott Rodino regulatory review and other customary closing conditions. The acquisition is expected to close in Synopsys' fiscal Q2. Software complexity and the resulting quality and security issues are dramatically increasing. Today, more than six million professional software developers across the world write more than 60 million lines of code every day, deployed to fulfill mission-critical, safety-critical and security-critical tasks. Many of those deployments are fragile or even failing, resulting in delayed or lost revenue, recalled products, loss of customer trust, and even safety issues. Since spinning out of a Stanford research project 10 years ago, Coverity has been developing revolutionary technology to find and fix defects in software code before it is released, improving software security. Bringing together the Synopsys and Coverity teams opens up opportunities to increase penetration into the semiconductor and systems space where Synopsys excels. The acquisition also enables Synopsys to enter a new, growing market geared toward enterprise IT and independent software providers that Synopsys doesn't currently address. "The Coverity team has pioneered innovative technology aimed at the rapidly growing number of quality and security issues in complex software development. Their strong customer focus has been central to building an excellent business and we have relied on Coverity's products for nearly 10 years," said Aart de Geus, chairman and co-CEO of Synopsys. "Working together, Synopsys and Coverity intend to bring the software development process to the level of 'first-time-right' functionality that software design teams are striving for. For Synopsys this is a natural technology adjacency and the opening of a significant new, growing market space." Many of the world's leading companies already rely on Coverity's tools. Its customer base includes nine of the top 10 software companies, seven of the top 10 aerospace and defense firms, eight of the top 10 global brands, and six of the top 10 semiconductor companies. "To address increasing challenges related to software quality and security, Coverity created disruptive technology that inspects and analyses the software code during development, allowing developers to fix quality and security defects before they become a problem," said Anthony Bettencourt, CEO, president, and chairman of Coverity. "By merging with a trusted technology and market leader who has experience building powerful development tools, we expect to accelerate the evolution of this new paradigm to benefit more and more software developers." While Synopsys will not update its 2014 financial guidance until after the transaction closes, at this time, due to the impact of purchase accounting and the associated deferred revenue haircut, Synopsys expects Coverity to contribute approximately $20-25 million to fiscal 2014 revenue. Therefore, Synopsys would expect the transaction to be approximately 10 cents dilutive in FY 2014, reach break-even in the second half of FY 2015, and be accretive thereafter (all on a non-GAAP basis). . (c) 2014 M2 COMMUNICATIONS |