01:33 PM EDT, 05/06/2024 (MT Newswires) -- Synopsys ( SNPS ) said Monday it has agreed to sell its software integrity group business to private equity firms Clearlake Capital Group and Francisco Partners in a transaction worth up to $2.1 billion.

The software integrity group business provides application security testing solutions. Its revenue for Synopsys' ( SNPS ) fiscal first quarter ended Jan. 31 was $138.2 million, representing 8.4% of the company's overall revenue and up from $127.8 million a year earlier, Synopsys ( SNPS ) reported in February.

The software company said Monday the deal consideration includes up to $475 million in cash, payable upon the buyers achieving a specified rate of return in connection with one or more liquidity transactions.

Clearlake and Francisco Partners are "ideal partners" to continue growing the software integrity business, Synopsys ( SNPS ) Chief Executive Sassine Ghazi said in a statement. "For Synopsys ( SNPS ), this move sharpens our focus on the unprecedented, high-growth opportunity we have in our core business -- where the engineering of silicon and systems is converging as technology (research and development) teams look to capitalize on this (artificial intelligence-driven) era of pervasive intelligence."

Upon the deal's completion, expected in the second half of 2024, the business will become an independent privately held company. It will continue to be led by its current management team. Synopsys ( SNPS ) said the name of the new standalone entity will be announced later.

"We are excited to partner with Synopsys ( SNPS ) to complete the carve-out of its software integrity group," Francisco Partners co-founder and CEO Dipanjan Deb said.

"We are ready to leverage Clearlake's O.P.S. framework to foster operational enhancements, build upon the software integrity group's robust product offering, and fuel new growth as a standalone enterprise," said Clearlake co-founder and Managing Partner Behdad Eghbali.

In January, Synopsys ( SNPS ) agreed to acquire design software company Ansys ( ANSS ) in a cash-and-stock deal valued at about $35 billion. That transaction is expected to close in the first half of 2025.

Synopsys ( SNPS ) is scheduled to release its fiscal second-quarter financial results May 22. Analysts polled by Capital IQ expect normalized earnings of $3.05 a share on revenue of $1.52 billion.

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