Racal-Redac cedes CAE in Viewlogic resale pact

Electronic News, Oct 18, 1993 by Jeff Dorsch

MARLBORO, MASS. -- Racal-Redac last week agred to sell its synthesis technology to Viewlogic Systems and to stop developing and selling its own computer-aided engineering (CAE) tools. Racal-Redac will instead focus on developing and marketing its more-successful printed circuit board and multichip module design software, while selling Viewlogic CAE packages as the front end to its layout software.

The two companies said they would "collaborate on future development of key technologies, including schematic capture, EDA library management tools and high-speed PCB design analysis tools." They will also "cooperate closely on the transition of Racal-Redac CAE customers to Viewlogic solutions."

The deal comes several months after Racal Electroncis denied that the Redac unit was for sale, while acknowledging that acquisition talks had been held earlier this year with the unit's management and other parties (EN, July 5). Some observers suggested Racal Electronics could not find a buyer for the entire business, but Racal executives weren't available for comment. Financial terms of the Viewlogic deal weren't revealed.

Analysts said the synthesis technology--acquired several years ago from a small company called Silc Technologies--has been under development for some time, but is the key aspect to the deal. "The Silc technology is very, very good; very advanced," said Gisela Wilson of International Data Corp. "But it needs more productizing."

ASIC synthesis technology has been a "major void in (Viewlogic's) product line," said Ron Collett of College International, who cited the exchange of synthesis technology as "the primary reason" behind the deal. Viewlogic said the synthesis technology, "much of which is not yet commercially available, is complementary to technology being developed by Viewlogic's own R&D group and will enable Viewlogic to offer new products in the area of electronic system design automation (ESDA) and high-level synthesis."

Racal-Redac has historically been weakest in the CAE segment, especially in the U.S. market, while its Visual tools for board layout command a substantial share of the world market, including one-third of the European market for such software.

Racal Electronics has been "looking around to sell (Racal-Redac) for a long time," Ms. Wilson said. "They never really successfully addressed the U.S. market. They just didn't have the marketing clout here. They never really learned to sell CAE tools." Mr. Collett said Redac has "a strong position in the printed circuit board marketplace."

Ms. Wilson characterized the deal in general as "a very positive move. Racal is going to be very good for Viewlogic in Europe."

Other observers said the success Viewlogic and Redac have in migrating users of Redac CAE tools to Viewlogic CAE tools, or in getting users of Redac layout tools to accept Viewlogic as their front end, will be crucial in proving the value of this agreement. One executive who has a lot of experience in migration issues in mergers and acquisitions, Cadence Design Systems president and CEO Joseph Costello, said it is critical to "get the expectations set early."

Racal customers need to get in touch with Viewlogic to find out how they will be supported under the new arrangement. Mr. Costello said. He called the combination of Racal and Viewlogic tools "mind-boggling," saying the arrangement may present a "channel conflict" for some Viewlogic OEMs.

In general, Mr. Costello applauded Viewlogic's continuing campaign to become a broad-line EDA vendor. Along with this deal, Viewlogic in the past year has acquired Vantage Analysis Systems and Quad Design Technology and taken an equity interest in Sunrise Test Systems in picking up key technologies in VHDL design, board design signal analysis and testability.

"They're obviously on the path to broaden their product line," said Mr. Costello.

Alain J. Hanover, Viewlogic's president and CEO, said, "For years, Racal-Redac has offered some of the strongest design layout solutions in the EDA industry. The incorporation of Viewlogic's front-end tools into the Redac offering will marry strength with strength, and therefore will do a lot for both companies and their customers."