Activist Elliott takes multibillion-dollar stake in Synopsys, source says

March 22 (Reuters) - Activist investor Elliott Investment Management has built a multibillion-dollar investment in electronic design automation company Synopsys SNPS.O, arguing the software company has room to boost sales and improve margins, a person familiar with the matter said.

Sunnyvale, California-based Synopsys, valued at over $80 billion, has for decades been one of the main suppliers of software used in determining how to arrange the tens of billions of transistors that make up chips from firms such as Advanced Micro Devices AMD.O and Nvidia NVDA.O.

The company appointed Sassine Ghazi as CEO in January 2024.

"Synopsys' Board of Directors and management team regularly engage with our shareholders on a range of issues and value their input," the company said in an emailed statement to Reuters.

The hedge fund is expected to engage with Synopsys to push the company to make more money from its software and services, the source, who cannot comment publicly on the private talks, said.

Its stock price has dropped 12.15% this year while rival Cadence Design Systems CDNS.O has lost 8.5% during the same time.

Elliott told the Wall Street Journal, which first reported the investment, there is a “clear opportunity for Synopsys’ financial performance to more fully reflect the value it delivers.” Elliott Managing Partner Jesse Cohn told the Journal, “as AI drives a step change in chip complexity and capital investment, Synopsys is uniquely positioned to benefit from this growth.”

Elliott did not immediately respond to a Reuters' request for comment.

Nvidia, a Synopsys customer, in December revealed it had invested $2 billion in the company as part of an expanded multi-year tie-up to jointly develop new tools for designing products across industries using its AI technology.

Nvidia CEO Jensen Huang said earlier this month AI will create jobs not cut them.

Elliott, founded in 1977 by billionaire investor Paul Singer and headquartered in West Palm Beach, Florida, is one of the world's busiest activist investors , having recently made investments in Norwegian Cruise Line Holdings NCLH.N, Align Technology ALGN.O and Japan shipper Mitsui OSK 9104.T.