Siemens overnight announced a $10.6 billion deal to buy US engineering software firm Altair Engineering, a deal that analysts are pleased will boost the company’s presence in the fast-growing industrial software market.
Still, there were some concerns about the high price paid by Siemens for Michigan-based Altair. The offering price of $113 per share represents a premium of about 18.7% to Altair’s closing on Oct. 21, a day before Reuters first reported that the company was exploring a sale.
The deal is Siemens’ biggest acquisition since Siemens Healthineers bought medical device maker Varian Medical Systems for $16.4 billion in 2020.
Analysts at Alfa Wertpapierhandel said the deal is not cheap but would strengthen Siemens’ struggling digital industries division.
“Altair adds AI-driven design and simulation,” Alfa said. “Overall, in the long term, this appears to be a good deal for Siemens.”
Jefferies analyst Simon Toennesen said the acquisition would give Siemens more expertise around artificial intelligence and high-performance computers.
It would also make the group a more credible rival to chip-design company Synopsys, which earlier this year agreed to buy design software firm Ansys, as well as Cadence Design Systems.
Siemens shares were down 0.8% at 0827 GMT, while the broader index was off 0.4%. The reaction in the share price could be due to the cost of the deal, a trader said.
Altair, whose simulation software helps predict how products will work in the real world, fits into Siemens’ strategy of using its hardware and software to combine the real and digital worlds.
The German manufacturer of trains and factory equipment is trying to expand beyond its traditional industrial customers by boosting its digital offering to improve the performance of its production lines, trains and buildings.
The transaction is expected to be accretive to Siemens’ earnings per share approximately two years from the closing of the deal, which is expected to occur in the second half of 2025.
It will also increase Siemens’ digital business revenue by about 8%, adding about 600 million euros ($651.4 million) to the company’s digital business revenue in fiscal year 2023.
Siemens said the transaction will have a revenue impact of approximately $500 million per year in the medium term and more than $1 billion per year in the long term.
Siemens competes with Rockwell Automation, Emerson Electric and ABB in the industrial software market, which is currently worth an estimated $21.5 billion annually and is projected to grow 16.7% per year.
Separately on Wednesday, Altair reported a 13% increase in third-quarter revenue to $151.5 million.
Engineering software companies have become attractive acquisition targets as investors bet on companies that could benefit from the boom in artificial intelligence.
In January, Synopsys agreed to buy design software firm Ansys in a $35 billion cash-and-stock deal.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
