Synopsys will pay a premium of 28.5 percent over Magma's Wednesday closing price of $5.72. Including debt, the deal is valued at about $507 million.
"This acquisition will enable Synopsys to accelerate the delivery of the technology our customers need to keep the overall cost of design in check," Chief Executive Aart de Geus said in a statement.
Synopsys, which plans to fund the deal with a combination of cash and debt, expects it to modestly add to adjusted earnings per share in fiscal 2012.
Separately, Synopsys forecast first-quarter results ahead of analysts' expectations, as it sees higher demand for its services from makers of mobile devices and cloud computing and electronics companies.
For the quarter, Synopsys -- which competes with Mentor Graphics (MENT.O) and Cadence Design Systems (CDNS.O) -- expects adjusted earnings of 51-53 cents a share on revenue of $412-$420 million.
Analysts were expecting earnings of 46 cents a share, excluding items, on revenue of $389 million, according to Thomson Reuters I/B/E/S.
For the fourth quarter, the Mountain View, California-based company, which makes software that help design chips, earned 45 cents a share, meeting analysts' estimates.
Total revenue rose 4 percent to $390.5 million, while estimates were for $390.1 million.
The Magma stock rose 25 percent to $7.17 in extended trading, while that of Synopsys was slightly up at $28.01.