**US-China Tariff Dispute Threatens Major Acquisition Deal**
The intensifying tariff conflict between the United States and China is creating uncertainty around one of the largest pending acquisitions globally. Traders are increasingly concerned that the takeover may face delays due to antitrust scrutiny from Chinese regulators. Ansys Inc., which agreed to be acquired by chip designer Synopsys Inc. for approximately $34 billion in January 2024, is now facing challenges as the deal’s spread—the difference between the cash-and-stock offer and the current trading price—has widened significantly from about $25 to over $40 per share in less than two weeks. This growing gap indicates rising doubts about whether the deal will receive the necessary approval from China, which both companies hope to secure in the first half of this year.
Matthew Osowiecki, a merger arbitrage-focused portfolio manager at Water Island Capital, noted, “China does not typically block transactions outright, but they could delay the process repeatedly until the companies ultimately abandon the deal.” He added that if China seeks to retaliate against the US, it could prolong the approval process or demand additional concessions, leading to further delays.
Despite both companies being headquartered in the US, their operations are global and crucial to China’s interests. Synopsys is among the few major firms worldwide that develop software for semiconductor design, with 16% of its projected 2024 revenues coming from China. Ansys specializes in simulation software that helps engineers forecast product performance in real-world scenarios. While the acquisition has already received regulatory approval in the US, UK, Europe, and several other regions, China remains the last significant hurdle.
Oppenheimer analyst Ken Wong emphasized that the deal is under scrutiny from Chinese regulators due to the companies’ involvement in “strategic sectors.” He pointed out that the escalating political tensions between Beijing and the Trump administration pose a greater risk to the deal’s completion. A spokesperson for Synopsys expressed optimism, stating that the company expects the transaction to close in the first half of the year and is making substantial progress toward obtaining regulatory approval. An Ansys representative declined to comment on the matter.
It is not uncommon for China’s reviews of foreign acquisitions to extend over time. For instance, in 2018, Qualcomm Inc. abandoned its $44 billion bid for Dutch chipmaker NXP Semiconductors NV after failing to secure timely approval. Similarly, in 2023, Intel Corp. withdrew its proposed $5.4 billion acquisition of Tower Semiconductor Ltd. for the same reason. Although Broadcom Inc.’s $61 billion merger with VMware Inc. eventually succeeded, investors remained anxious throughout the process due to speculation that Chinese regulators were delaying the deal.
The uncertainties surrounding this major acquisition are also impacting smaller deals, highlighting the broader implications of the ongoing US-China trade tensions.
**FAQ**
**Q: What is the current status of the Ansys and Synopsys acquisition?**
A: The acquisition is facing potential delays due to scrutiny from Chinese regulators amid rising US-China trade tensions, with both companies hoping for approval in the first half of the year.
