The logo of Cadence Design Systems is pictured outside the company's offices in San Jose, California, U.S., January 31, 2020. REUTERS/Stephen Nellis/File Photo
(Reuters) -Cadence Design Systems will buy BETA CAE Systems International AG, which makes software for analyzing car and jet engine designs, for $1.24 billion in cash and stock, Cadence said on Tuesday.
Cadence will pay about $744 million in cash and the rest in stock. The San Jose, California-based company said it will take on debt to pay for the deal but pay the debt down with cash generated from operations.
Cadence's shares were down 1.5% premarket, showing little reaction to the news.
Cadence is one of the largest makers of software used in designing computer chips, helping chipmakers decide where to place billions of transistors to form complex circuits. But over the past six years, it has been moving into design software for the larger physical systems from circuit boards to airplanes. Last month, the company announced a supercomputer designed to help simulate how air flows around jet engines, among other uses.
The BETA CAE deal continues that trend. Its software is widely used to analyze designs in automotive and aerospace industries, with customers such as Honda Motor Co, General Motors and Lockheed Martin.
The Cadence deal announced Tuesday comes after the firm's largest rival, Synopsys, said it will spend $35 billion to buy Ansys, another maker of physical analysis software.
The BETA CAE deal is expected to close in the second quarter of the year and Cadence expects BETA CAE to contribute about $40 million to its 2024 revenue, Cadence said in a statement.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath and David Evans)
