Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Siemens has agreed to buy simulation software company Altair for $10.6bn in an all-cash deal, in the latest multibillion-dollar consolidation in the engineering software industry.
The German industrial conglomerate will pay $113 in cash per share of Altair, valuing the Michigan-based company at $10.6bn, Siemens said in a statement. Altair sells data analytics technology and services to big corporate clients in industrial manufacturing, consumer goods, energy and other sectors.
Siemens’ deal for Altair, its third-largest to date, was likely to mark a coda to the consolidation in the engineering software industry following Synopsys’ $35bn deal for design automation company Ansys earlier this year, according to analysts.
“It is a logical next step,” Roland Busch, president and CEO of Siemens, said in the statement. “We have been building our leadership in industrial software for the last 15 years.”
Siemens said it was considering the sale of its shares in other entities to finance the deal. Analysts speculated Siemens would sell down its stake in Siemens Healthineers, a business it spun out as it increasingly focused on technology. Siemens in 2015 sold its 50 per cent stake in its home appliances joint venture, and has also spun out Siemens Energy.
The deal, expected to close in 2025, represents a 19 per cent premium to Altair’s last unaffected closing price. Altair’s shares have risen 29 per cent over the past year, a premium compared to the S&P 500’s 22 per cent gain.
“On the face of it, the deal appears to be an expensive acquisition. But what does make sense is that Siemens would become the clear number two in simulation,” said James Moore, an analyst at Redburn Atlantic.
The Siemens purchase will be the second-largest in the software sector so far this year, according to Dealogic data. Mergers in software have remained relatively muted compared with a boom in 2021 and 2022, with $369bn worth of software deals counted so far this year.
Citi and JPMorgan were financial advisers to Altair, while Davis Polk and Lowenstein Sandler were legal advisers.
Read the full article here