This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Magma Design Soars on Synopsys Deal

Stocks in this article: LAVA SNPS

NEW YORK ( TheStreet) -- Magma Design Automation (LAVA) soared on heavy volume Thursday after the San Jose, Calif.-based software company agreed to be acquired by Synopsys (SNPS) for $7.35 a share.

The consideration is a 28.5% premium to Magma Design's closing price on Wednesday of $5.72 per share, and a 40% premium to the stock's 50-day moving average of $5.25 per share. At the same time, it's also a discount to the stock's 52-week high of $8.50 reached on July 7.

Synopsys, which announced the agreement after the market close on Wednesday, said the transaction is worth roughly $507 million, net of cash and assumed debt.

Shares of Magma Design, whose products are used to design semiconductors and other electronic products, are up $1.42, or 24.8%, to $7.14 in midday action on volume of 39.2 million, far eclipsing the issue's trailing three-month daily volume of less than 800,000. The stock was the second most-active issue on the Nasdaq Stock Market, just behind Sirius XM Radio (SIRI) at 40.3 million.

The deal values Magma Design at 19 times the current forward consensus estimate for earnings of 39 cents a share in the company's fiscal year ending in April.

"Magma and Synopsys have always shared a common goal of enabling chip designers to improve performance, area and power while reducing turnaround time and costs on complex ICs," said Rajeev Madhavan, CEO of Magma, in a press release. "By joining forces now we can ensure that chip designers have access to the advanced technology they need for silicon success at 28, 20 nanometer and below."

Synopsys stressed the complementary nature of the deal in its announcement and said it expects the transaction to close in the calendar second quarter of 2012, assuming it passes muster with shareholders and regulators. Synopsys plans to fund the deal through a combination of cash and debt and said it would announce further details upon the transaction's completion.

"The dramatic rise in complexity of today's semiconductor designs for all process nodes requires an equally dramatic increase in designer productivity," said Aart de Geus, the chairman and CEO of Synopsys, in a statement, adding later: "This acquisition will enable Synopsys to accelerate the delivery of the technology our customers need to keep the overall cost of design in check."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs