* Deal includes $29 mln in cash on Apache’s balance sheet
* Acquisition is Ansys’ biggest since Ansoft deal in 2008
* Apache had filed for IPO in March (Adds background, analyst comments, details in paragraphs 2,4-11,14, updates share movement)
By Sayantani Ghosh
BANGALORE, June 30 (Reuters) - Simulation software maker Ansys Inc said it will buy privately held rival Apache Design Solutions in a $310 million deal, arming itself with software used to design energy efficient electronic devices.
Apache, which makes engineering simulation software, mostly helps chipmakers make chips more power efficient by simulating the power usage. It had more than doubled its customer base to 118 in the last three years.
The market for devices such as tablets, smartphones and LCD screens is red hot, but a key challenge for manufacturers is to design products that sip less power.
San Jose, California-based Apache, which in part competes with traditional chip-design software makers like Synopsys Inc and Cadence Design Systems Inc , had filed for an initial public offering of $75 million in March.
Apache’s 2009 revenue grew by 35 percent to $34.6 million and 2010 revenue by 27 percent to about $44 million, according to its IPO filing.
The purchase price is about 5.7 times trailing 12-month revenue and 4.5 times forward 12-month revenue, Benchmark Company analyst Mark Schappel said.
“Apache has a much higher growth rate than some of the other electronic design automation (EDA) guys. It’s a good strategic acquisition, they are paying a good price,” Schappel said.
Apache’s CEO Andrew Yang, who owned about 20 percent of the company, will serve as president of the Apache subsidiary under Ansys, Apache said in its prepared conference call remarks.
Ansys uses the 3-D models of devices simulated by companies like Autodesk Inc and performs engineering algorithms on them to see if they perform as designed.
Ansys, which caters to Petrobras Brasileiro and Medtronic Inc , bought Ansoft Corp for $832 million in 2008, pitching 24 percent of its business as competition to the traditional EDA vendors, Schappel said.
The Apache acquisition, its biggest since Ansoft Corp, will see 30 percent of its revenue coming from its EDA business, the analyst said.
The purchase price for Apache includes about $29 million in cash on Apache’s balance sheet and the agreement includes an additional $13 million of performance equity awards payable to Apache’s employees.
Ansys, which intends to fund the transaction with cash on hand, expects the deal to close in the third quarter.
In April, Parametric bought Canada’s MKS Inc for about $305 million to better provide embedded software design services to customers like Toyota Motor Corp , Boeing and HP .
BofA Merrill Lynch advised Ansys on the deal while Deutsche Bank Securities advised Apache.
Shares of Canonsburg, Pennsylvania-based Ansys were trading up 17 cents at $55.15 in later morning trade on Nasdaq. The stock had touched its lifetime high of $57.50 on May 31. (Additional reporting by Siddharth Cavale and Bijoy Koyitty; Editing by Savio D’Souza and Gopakumar Warrier)