The tariff battle between the United States and China is putting shadows on one of the world’s largest pending deals, and traders are increasingly worried that Beijing’s antitrust regulators will fall into a takeover.
Ansys Inc. agrees to be acquired by Chip-Designer Synopsys Inc. for approximately $34 billion, according to data compiled by Bloomberg. But in less than two weeks, the spread of transactions – the difference between cash and stock quotes and target companies’ current trading prices has expanded from about $25 per share to more than $40.
This swelling gap reflects growing uncertainty that the deal will be able to clear its last major obstacle – approved by China, which companies hope to receive in the first half of this year.
“China won’t tend to block transactions altogether, but they can kick the cans over and over again until the company finally gives up,” said Matthew Osowiecki, portfolio manager at Water Island Capital for merger arbitrage. “If they are looking for a way to get back to the U.S. by extending the process or extracting other remedies, this can lead to delays.”
Although both companies are based in the United States, their business is global and a key area in China. Synopsys is one of the few major companies in the world that make software for designing semiconductors, with 16% of its revenue in 2024 coming from China, Bloomberg data shows. ANSYS enables simulation software used by engineers to predict how products work in the real world.
The purchase has been approved by regulators in the United States, the United Kingdom, Europe and several other smaller jurisdictions. China is the last important persistence.
Oppenheimer analyst Ken Wong said the deal deserves a review of Chinese regulators because the companies are in the “strategic division.” But political tensions between Beijing and the Trump administration are growing, posing greater risks to the closing of the deal, he said.
A company spokesperson said Synopsys continues to expect the deal to end in the first half of the year and “major progress has been made in obtaining regulatory approvals.” ANSYS representative declined to comment.
China’s comments on foreign company acquisitions are not uncommon. In 2018, the US-based Qualcomm canceled a $44 billion bid from Dutch chip maker NXP NXP semiconductor NV after failing to get a timely nod and Intel Corp in 2023.
The $61 billion merger of Broadcom Inc. and software maker VMware Inc. was finally passed, although investors were at an edge throughout the process, due to speculation that China is reaching the deal.
Uncertainty can also affect smaller transactions. For example, the difference in the proposed combination of BT network testing company Spirent Communications PLC and US buyer Keysight Technologies Inc. has reached its highest level since November. According to data compiled by Bloomberg, China’s Huawei Technologies is Spirent’s second largest customer.
Keysight’s takeover received approval from UK competition regulators last month. However, the company has since postponed its completion date (previously at the end of April) to the end of July, while seeking approval in the United States and China. Keysight declined to comment.
“China may pay for time about U.S. deals, which is a secret retaliation strategy for the U.S.,” said Emmanuel Valavanis, senior vice president of equity sales at Forte Securities. “Tariffs are the frontier and center of investors now, but don’t forget that we have also had an IP war between China and the U.S. for years, as well as active competition among Chinese companies on technology and the U.S. blacklist.”
This article was generated from the Automation News Agency feed without the text being modified.
