Core Insights - Cadence Design Systems, Inc. (CDNS) is enhancing its business through strategic acquisitions in the electronic design automation (EDA) space [1] Inorganic Growth Strategy - Inorganic expansion provides valuable tools, technologies, and market access that accelerate organic growth, allowing companies to increase product offerings without starting from scratch [2] - Acquiring firms with strong R&D capabilities speeds up innovation processes and helps achieve synergies, leading to cost reductions and improved operational efficiency [2] Market Demand and Strategic Response - CDNS's M&A strategy is a response to the growing demand for AI-driven custom chips and the convergence of electronic, mechanical, and physical domains in next-generation designs [3] - The transformation in semiconductor and system design driven by AI is integral to CDNS's strategy, supported by secular growth drivers such as 5G, hyperscale computing, and autonomous vehicles [4] Recent Acquisitions - In September 2025, CDNS agreed to acquire the Design & Engineering division of Hexagon AB for €2.7 billion, which includes the MSC Software business [5] - The Hexagon acquisition will enhance Cadence's System Design & Analysis portfolio and expand its presence in the structural analysis market, building on the earlier acquisition of Beta CAE in 2024 [6] - Hexagon's D&E division generated approximately $280 million in 2024 revenues and employs over 1,100 experts in R&D, sales, and support [6] - The acquisition will allow Cadence to reach top-tier aerospace and automotive clients, including Boeing, Lockheed Martin, and Toyota, as industries shift towards electric vehicles and advanced materials [7] Additional Strategic Acquisitions - In April 2025, Cadence signed an agreement to acquire Arm Holdings' Artisan foundation IP business, and in January 2025, it agreed to acquire Secure-IC, enhancing its security solutions capabilities [8] - The acquisition of BETA CAE has broadened Cadence's multiphysics system analysis offerings, while the purchase of OpenEye Scientific Software opened a new vertical in drug discovery [9][10] - Other significant acquisitions include Future Facilities, Pointwise, and NUMECA, which have increased the system analysis portfolio with more CFD solutions [12] Competitive Landscape - Cadence's acquisition strategy is aimed at solidifying its position in the EDA space amid increasing competition from Siemens EDA, Synopsys, Keysight Technologies, and CEVA Inc [14] - The acquisition of ANSYS by Synopsys is expected to intensify competition in the EDA space [15]

Key Takeaways Cadence will buy Hexagon's Design & Engineering division, including MSC Software, for 2.7B euros.The deal expands Cadence's System Design & Analysis reach into advanced structural analysis.Hexagon's D&E serves top aerospace and auto clients with tools like MSC Nastran and Adams.Cadence Design Systems, Inc. (CDNS) has signed a definitive agreement to acquire the Design & Engineering (D&E) division of Hexagon AB, including its renowned MSC Software business, an industry pioneer in engineering si ...

Core Insights - Cadence Design Systems, Inc. has signed a definitive agreement to acquire Arm Holdings' Artisan foundation IP business, which includes standard cell libraries, memory compilers, and general-purpose I/Os, enhancing Cadence's IP portfolio [1][5] - The acquisition is expected to close in Q3 2025, pending regulatory approvals, and is not anticipated to significantly impact Cadence's revenues or earnings in the current fiscal year [2][3] Group 1: Acquisition Details - The acquisition will strengthen Cadence's position in the system-on-chip (SoC) design ecosystem, aiding customers in reducing time-to-market while optimizing power, performance, and cost [3][5] - The deal is structured as an asset purchase agreement along with a technology license agreement, which will be finalized at closing [3] - Cadence will acquire a skilled engineering team from Arm, known for its expertise in the IP industry, which is expected to accelerate the development of existing and new IP products [4][5] Group 2: Strategic Importance - Management emphasized that the addition of Artisan IP marks Cadence's entry into the foundation IP market, allowing the company to explore new growth areas and enhance its IP strategy [5] - The acquisition is part of a broader strategy of strategic acquisitions that have been pivotal in developing Cadence's business, including recent acquisitions of Secure-IC, BETA CAE Systems, and Invecas [6][7][8] Group 3: Market Position - Cadence currently holds a Zacks Rank 3 (Hold), with shares declining by 9.3% over the past year, compared to a 4.2% decline in the Zacks Computer – Software industry [9]

Core Insights - Cadence Design Systems, Inc. (CDNS) is enhancing its business through strategic acquisitions, which provide valuable tools, technologies, and market access to accelerate organic growth [1][2] Recent Acquisitions - In January 2025, Cadence signed an agreement to acquire Secure-IC, a provider of embedded security IP platforms, expected to close in the first half of 2025 [3] - The acquisition will enhance Cadence's capabilities in delivering security solutions for complex system-on-chips across various industries, leveraging Secure-IC's expertise and proven portfolio [4] - Cadence's existing portfolio, including AI/machine learning and digital signal processing solutions, will benefit significantly from Secure-IC's offerings [5] - Previous acquisitions include BETA CAE, which enhances Cadence's Intelligent System Design strategy, and Invecas, Inc., a provider of embedded software solutions [6] - Other notable acquisitions include Intrinsix, which expanded Cadence's footprint in advanced nodes and security algorithms, and the purchase of the SerDes and memory interface PHY IP business from Rambus [6][7] Acquisition Strategy Challenges - While acquisitions can be beneficial, they also present challenges such as integration difficulties and impact on the balance sheet, with Cadence's goodwill and intangible assets totaling $2.973 billion, representing 33.1% of total assets as of December 31, 2024 [8] Competitive Landscape - The pending acquisition of ANSYS by Synopsys is expected to increase competition in the electronic design automation (EDA) space, affecting Cadence and other players like Keysight Technologies [9][10] - Synopsys' acquisition of ANSYS, valued at $35 billion, is anticipated to create a synergistic powerhouse in semiconductor design and testing [10][12] - Keysight Technologies is also pursuing inorganic expansion, having acquired Synopsys' Optical Solutions Group, with the deal expected to close in the first half of 2025 [13]