( ESNUG 550 Item 8 ) -------------------------------------------- [05/22/15]
Subject: VC does back-of-envelope on rumored $150 M Synopsys Atrenta buyout
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STRANGE BEDFELLOWS: You know how I broke the rumor on Cinco de Mayo that
it looks like SNPS was going to buy Atrenta for a $150+ bid?
Rumor is that it's not the usual EDA suspects bidding on Atrenta. That
is, Cadence and Mentor are NOT bidding to buy Atrenta at all -- instead
this is a Dassault vs. Synopsys bidding war. (Yes, Dassault!)
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From: [ A Money Guy ]
Hey John,
Regarding your May 5th rumor that Synopsys about to acquire Atrenta for
a bid north of $150 million.
Crunchbase shows venture investment into ATRN of more than $33 M including
two Series D rounds. (How do you get two Series D's?) ATRN's annual revenue
estimates have been between $40 to $50 million.
So being acquired for $150 million is 28% return on that venture capital.
Mezzanine (Series C or D) typically looks for 2.5 to 3x return
Based on revenue, they're being acquired at a ~3x multiple of revenue.
(How much did Atrenta pay for NextOp?)
If I were to guess...
On the Atrenta side:
- Linting market saturating
- product revenue flat
- Creating new products from scratch, to add to already rich offering
- NextOp assertion synthesis is too hard to sell due to benchmarking,
so growth hasn't taken off as expected
And ATRN has a Sr Executive looking toward retirement in 5 years. Kids done
with college. Sell now, coast into a soft landing, chill for 2-3 years with
the package from SNPS. Then done. Move to India, live like a king in a
massive house with a chauffeur, 2 maids, 2 cooks.
On the Synopsys side:
= The SNPS linting product can't get mind-share from SNPS sales with
too many products to sell. They'd rather sell big ticket ICC2.
- Yes, the Formality has been doing well, that's basic Formal verif.
- The SNPS low power optimization tech, Chardonnay, not taking off.
Why? Cadence has the Conformal product.
With ATRN, Aart would get timing constraints checking, low power checking,
and the ever-touted by Gary Smith "RTL Prototyper" (Spruce Goose)
So the fit makes sense. Good people working at ATRN. They have nice
useful/sellable products. The acquisition price is not overpriced.
Seems like a reasonable deal.
Dassault dropping out makes sense. They're distracted by non-EDA to be able
to do Atrenta well. Do you know why Wally nor Lip-Bu didn't bid on Atrenta?
PLEASE KEEP ME ANONYMOUS
- [ A Money Guy ]
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