Ansys stock jumped Friday on reports that the maker of engineering simulation software might be a takeover target.
Bloomberg reported late Thursday that Ansys is weighing its options, including a sale, after getting takeover interest.
On Friday afternoon, the Wall Street Journal said Synopsys was in talks to acquire Ansys. The Journal said the talks could still fall apart and another suitor could emerge.
Ansys makes simulation software used by engineers to help predict how products from semiconductors to engines will work in the real world. It serves such industries as aerospace and defense, automotive, energy, health care and industrial equipment.
Ansys declined to comment on the reports. "M&A rumors are not uncommon in our industry, and it's our longstanding policy not to comment on them," a company spokesperson said.
Ansys Stock Blasts Off
On the stock market today, Ansys stock rocketed as much as 20% to 363.86. It ended the regular session up 18.1% to 357.98.
Ansys stock had been in a consolidation pattern for 23 weeks with a buy point of 351.23, according to IBD MarketSmith charts.
Industry peer Altair Engineering could see a "halo effect" from the takeover talk, Oppenheimer analyst Ken Wong said in a client note. "Most investors felt Altair was the more logical M&A target in the simulation space due to its size (roughly $6.8 billion market cap)," he said. Ansys now has a market cap of over $31 billion.
Altair stock rose 11.5% to 83.29 on Friday.
Potential Bidders For Ansys
Electronic design automation companies like Synopsys and Cadence Design Systems are potential acquirers of Ansys, Wong said.
Other possible buyers include multinational companies such as Siemens, Honeywell and General Electric, which "have previously shown an appetite for software."
JPMorgan analyst Stephen Tusa said he believes Cadence and Synopsys would be the most likely acquirers.
Ansys peers like Siemens and Dassault Systems wouldn't be interested because they "already have competitive solutions," Tusa said in a client note.
Other potential buyers or merger partners include Autodesk and PTC, he said.
Ansys has about 20% market share in the fragmented $10 billion simulation and analysis market, Tusa said.
Ansys stock ranks eighth out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. ANSS stock has an IBD Composite Rating of 56 out of 99.
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