Investing.com -- Shares of Cadence Design Systems Inc (NASDAQ: CDNS ) fell by 1.7% while Arm Holdings (NASDAQ: ARM ) saw a 3.1% decline, as Cadence announced its intention to acquire Arm’s Artisan foundation IP business. The move aims to enhance Cadence’s design IP offerings and expand its presence in system-on-chip (SoC) designs.

The agreement, subject to regulatory approvals and customary closing conditions, is expected to close in the third quarter of 2025. Cadence’s acquisition includes standard cell libraries, memory compilers, and general-purpose I/Os, which are optimized for advanced process nodes at leading foundries. This strategic step is anticipated to solidify Cadence’s commitment to accelerating customers’ time to market and optimizing cost, power, and performance on top foundry processes.

Boyd Phelps, senior vice president and general manager of the Silicon Solutions Group at Cadence, emphasized the significance of the acquisition. "During its 25-year history, Arm’s Artisan IP has established a strong presence and reputation in the global ecosystem of foundries and SoC partners. With the expected addition of the Artisan IP business and team, Cadence will enter the foundation IP market, enabling us to capitalize on new growth opportunities," said Phelps.

The transaction also includes a highly skilled engineering team from Arm, which is expected to help accelerate the development of both related and new IP products for Cadence. Kevork Kechichian, executive vice president of Solutions Engineering at Arm, expressed confidence in Cadence as the ideal partner to advance the Artisan technology and ensure its continued significance in the semiconductor industry.

Despite the strategic nature of the acquisition, the market’s immediate reaction has been cautious, with both Cadence and Arm shares experiencing a downturn. The acquisition is not expected to materially impact Cadence’s revenue and earnings for this year, suggesting that the market’s response may be influenced by the long-term implications and execution risks of the deal.

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