BEIJING, July 14 (Reuters) - China's market regulator

has conditionally approved U.S. chip design software provider

Synopsys' ( SNPS ) acquisition of engineering design firm Ansys ( ANSS )

, clearing the last significant regulatory obstacle for

the $35 billion buyout.

The State Administration for Market Regulation's conditional

approval that came on Monday will finally allow two major

players in the electronic design automation (EDA) industry to

join forces after the deal, which was announced early last year,

faced intense antitrust scrutiny in markets such as Britain.

After extensive investigations, the deal had received merger

clearance in every jurisdiction except China, according to the

companies. The deadline to close the deal ends on July 15, but

there's an option to extend it till January next year.

Shares of Synopsys ( SNPS ) rose more than 4% in premarket trading,

while those of Ansys ( ANSS ) were up nearly 3%.

Months of back-and-forth over U.S. restrictions on export of

electronic design automation tools to China had led to fears

that Chinese regulators might block the deal in retaliation.

The United States earlier this month lifted restrictions on

exports to China for chip design software developers, which

allowed companies such as Synopsys ( SNPS ) and competitor Cadence Design

Systems ( CDNS ) to restore access to their software and

technology for Chinese customers.

The Chinese regulator approved the deal based on some

commitments submitted by the companies, requiring the merged

entity to fulfil several obligations.

The companies will have to continue supplying EDA products

to Chinese customers on fair and non-discriminatory terms.

The conditions also require the companies to honour existing

customer contracts, maintain existing interoperability

agreements and renew them on request from Chinese customers.

Interoperability agreements are often put in place to ensure

different systems, across organizations, are able to work

seamlessly and can be used to enable information sharing.

Synopsys' ( SNPS ) acquisition of Ansys ( ANSS ) could help its competitive

position against Cadence, making it a larger rival with a more

diverse set of design tools under its belt, analysts say.