The Motivations and Effectiveness of Vertical Mergers and Acquisitions in the Electronic Design Automation Industry—The Primarius Technologies Case

Abstract

As a core supporting tool for integrated circuit design, Electronic Design Automation (EDA) faces high technical barriers and a highly concentrated market, long dominated by international giants. Domestic EDA software in my country still faces shortcomings in key technologies and toolchain integrity. Relying solely on independent research and development will not lead to short-term breakthroughs. Therefore, vertical mergers and acquisitions (M&A) have become a key avenue for domestic companies to enhance their technological capabilities and improve their product portfolios. This paper examines the motivations and effectiveness of vertical mergers and acquisitions, focusing on Primarius' 2023 acquisition of Magwel in Belgium. Using a case study approach, the study draws on company annual reports, financial data, and industry research materials to analyze the motivations from four perspectives and evaluate the effectiveness of vertical mergers and acquisitions across two dimensions: financial performance and non-financial outcomes. The results indicate that, while facing short-term pressure, vertical mergers and acquisitions have demonstrated positive benefits, including technological collaboration, customer resource expansion, and market optimization. These results provide valuable insights into M&A practices in high-tech industries and the development of the domestic EDA industry.