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Microsoft Monetizing Copilot, Round 2; Synopsys Pays Big for Ansys

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While Microsoft Corp. (NASDAQ: MSFT) has invested a reported $13 billion in OpenAI and its ChatGPT AI model, the company has only just begun to seek some payback. And a big tech merger raises hopes for a better year for M&A. (See which 25 huge companies Apple could buy with cash right now.)

Microsoft opens subscriptions to Copilot

Microsoft opens the door to more business customers for Copilot.

Last November, Microsoft began offering its AI-based Copilot for Microsoft 365 to enterprises willing to license the software for a minimum of 300 people at $30 a month per seat. The company announced Tuesday that the minimum licensing requirement has been dropped. Now a business may purchase a single Copilot for Microsoft 365 for the same price.

The company already has a free version of Copilot with limited capabilities for individual users and a licensed version for $20 a month that adds Copilot to Outlook, Excel, PowerPoint, Word, and OneNote.

The free version was previously named Bing Chat and works with Microsoft’s Bing search engine. It also provides web grounding services, a feature that provides context for answers that Copilot generates.

The $20 per month version adds Copilot capabilities to  Outlook, Excel, PowerPoint, Word and OneNote and offers priority access to ChatGPT’s large language models.

Microsoft executives have said the demand for the AI tool is strong and by incorporating Copilot with Office 365, the company sees a path to wringing a few more bucks out of consumers.

Mega-merger of chip design firms

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Chip design and testing firms merge in 2024’s first megadeal.

The chip design company Synopsys Inc. (NASDAQ: SNPS) has agreed to acquire Ansys Inc. (NASDAQ: ANSS) in a cash and stock deal valued at $35 billion. Ansys shareholders will receive $197 in cash and 0.345 shares of Synopsys stock for each share they own.

That pencils out to around $390.19 per Ansys share, a premium of around 35% based on share prices on December 21, 2023, when the potential acquisition was first reported. The deal places an enterprise value of around $35 billion on Ansys. The company’s market cap as of Friday was $30.1 billion.

Ansys develops and sells engineering simulation software and services. The company was founded in 1970.

Synopsys, founded in 1986, develops and sells electronic design automation software for designing and testing integrated circuits.

In a reversal of the usual investor reaction to a deal like this, Synopsys traded up about 0.5% in Tuesday’s premarket, and Ansys traded down by more than 4%. The premium clearly fell short of expectations.

Also trading lower Tuesday morning was Cadence Design Systems Inc. (NASDAQ: CDNS), a primary competitor to both Synopsys and Ansys.

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