ANSYS has agreed to acquire Livermore Software Technology Corp., which provides explicit dynamics and other advanced finite element analysis technology, for $775 million. The transaction should empower ANSYS customers to solve a new class of engineering challenges, including developing safer automobiles, aircraft and trains while reducing or eliminating the need for costly physical testing.
Of the purchase price, 60 percent will be paid in cash and 40 percent will be paid through the issuance of ANSYS common stock to the current owners of LSTC. In conjunction with the transaction, the Canonsburg-headquartered provider of engineering simulation software expects to obtain new debt financing to fund all or a significant portion of the cash component of the purchase price.
The transaction is expected to close in the fourth quarter of 2019. ANSYS management will provide further details regarding the transaction and its impact on the 2019 financial outlook after the closing.
ANSYS expects that the transaction to add $60 million to $65 million of non-GAAP revenue to its 2020 results and will be neutral to modestly accretive to non-GAAP operating margins and diluted earnings per share. Non-GAAP projections exclude the effects of acquisition adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets and transaction costs related to the acquisition.
The automotive industry has widely adopted the Livermore, California, company’s solution, LS-DYNA, to accurately predict a vehicle’s behavior and the effects on occupants during a collision. To do this, LS-DYNA simulates the behavior of the vehicle structure and all components including tires, seats, seatbelts, airbags, accelerometers, sensors and batteries in a fully coupled mathematical framework. LSTC counts the vast majority of tier one automotive suppliers among its customers.
The combined company’s strengths in simulation for structures, fluids, electromagnetics, optics, safety and machine learning should deliver a powerful solution for autonomous and electric vehicles to global automotive manufacturers and their suppliers.
LSTC’s solutions also are widely used in aerospace, civil engineering, defense, manufacturing and the biomedical industries.
“LSTC has been a decades-long ANSYS partner, and we have tremendous respect for the deep ties that they have built with their customers for more than 30 years,” ANSYS President and CEO Ajei Gopal said, in a statement. “Upon close, we expect our shared customer-centric approach, coupled with access to our combined portfolio of simulation solutions, will deliver enormous value to our mutual customers.”