Synopsys Acquires Black Duck Software for $565 Million

Synopsys Inc. and Black Duck Software Inc. have signed a definitive agreement for Synopsys to acquire privately held cybersecurity company Black Duck. California-based Synopsys will pay $565 million for the 15-year-old company in efforts to bolster its presence in the software security space by broadening its product offering and expanding its customer reach.

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Cybersecurity software vendor Synopsys expects Black Duck, a leader in automated solutions for securing and managing open source software, to contribute approximately $55 million to $60 million to fiscal 2018 revenues. The acquisition is expected to be about $0.12 dilutive to 2017 non-GAAP earnings per share, reach break-even in the second half of 2019 and be accretive afterwards. Founded in 1986, Synopsys is the world’s 15th largest software company, known for its electronic design automation (EDA) offerings which aid customers in designing and testing silicon chips. The firm reported over $2.4 billion in revenues last year.

In acquiring Black Duck, Synopsys is hoping to double down on the acceleration of open source software (OSS), which it says now makes up over 60% of the code in today’s applications. While open source code has helped organizations drastically decrease development costs and speed up time to market, the new technology has opened up a whole realm of security and license-compliance challenges.

"Today, software security is top of mind for every organization and their Boards of Directors. As reliance on open source grew rapidly over the last decade because of its economic value, most organizations have struggled in their efforts to secure and manage it effectively. Many high-profile, costly breaches resulted. Our rapid growth and success over the last four years is evidence that organizations are taking open source security very seriously," said Black Duck’s Chief Executive Officer Lou Shipley.

Black Duck has raised about $74 million from investors including Intel Capital, Fidelity Ventures, SAP Ventures, General Catalyst Partners, next 47 and Red Hat. The company has no plans for layoffs as most of its 400 employees, including Shipley, will join Synopsys.