Synopsys, a leading provider of software for chip design, announced on Tuesday that it has agreed to acquire Ansys, a maker of simulation software for various industries, in a cash-and-stock deal valued at $35 billion.

According to Reuters, the deal, which is the largest in the technology sector since Broadcom‘s $69 billion acquisition of VMware last November, would create a powerhouse in the field of software for engineering and design.

Synopsys said it would pay $390.19 per share for Ansys, a 29% premium over its closing price on Dec. 21, 2023. Ansys shareholders would receive 0.6 shares of Synopsys and $190 in cash for each share they own.

The deal is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions. Synopsys expects the deal to be accretive to its adjusted earnings within the second full year after closing and substantially accretive thereafter.

Synopsys, which serves major chipmakers such as Intel, AMD and Nvidia, said the deal would enhance its portfolio of semiconductor electronic design automation (EDA) tools with Ansys’ simulation and analysis software, which is used by engineers, designers and researchers across industries such as aerospace, defense, automotive and energy.

The combined company would offer a comprehensive suite of software solutions for designing, testing and optimizing products ranging from airplanes to tennis rackets.

Ansys, which competes with Autodesk’s Fusion 360, AutoCAD and Dassault Systemes’ Solidworks, has been exploring a sale since late last year, after receiving inbound interest from another design software firm, Cadence Design Systems (CDNS.O), Reuters reported on Dec. 22.

Ansys shares fell 3.9% to $333 in premarket trading on Tuesday, while Synopsys shares rose 2.1% to $334.

Both companies have seen their stock prices soar over the past year, amid a surge in demand for artificial intelligence applications.

Synopsys and Ansys have been partners since 2017, when they launched a joint initiative to provide solutions for chip designers to improve the quality and efficiency of their design process.

Under the terms of the deal, Synopsys would pay Ansys a $1.5 billion break-up fee if the deal is terminated due to antitrust issues or other specified reasons. Ansys would pay Synopsys a $950 million break-up fee if it accepts a superior offer from another bidder.