(Siemens: Munich) -- Siemens has signed an agreement to acquire Altair Engineering, a leading provider of software in the industrial simulation and analysis market. Altair shareholders will receive $113 per share, representing an enterprise value of approximately $10 billion. The offer price represents a 19% premium to Altair’s unaffected closing price on Oct. 21, 2024, the last trading day prior to media reports regarding a possible transaction. With this acquisition, Siemens strengthens its position as a leading technology company, and its leadership in industrial software.

“Acquiring Altair marks a significant milestone for Siemens,” says Roland Busch, president and CEO of Siemens AG. “This strategic investment aligns with our commitment to accelerate the digital and sustainability transformations of our customers by combining the real and digital worlds. The addition of Altair’s capabilities in simulation, high-performance computing, data science, and artificial intelligence, together with Siemens Xcelerator, will create the world’s most complete AI-powered design and simulation portfolio. It is a logical next step. We have been building our leadership in industrial software for the last 15 years, most recently democratizing the benefits of data and AI for entire industries.”

“The acquisition of Altair is highly synergistic, underpinning Siemens’ stringent capital allocation, balancing investments and shareholder returns on the basis of a strong balance sheet,” says Ralf P. Thomas, CFO of Siemens AG. “The transaction is expected to be EPS accretive two years post-closing.”

“This acquisition represents the culmination of nearly 40 years in which Altair has grown from a startup in Detroit to a world-class software and technology company,” says James Scapa, Altair’s founder and CEO. “We have added thousands of customers globally in manufacturing, life sciences, energy, and financial services, and built an amazing workforce and innovative culture. We believe this combination of two strongly complementary leaders in the engineering software space brings together Altair’s broad portfolio in simulation, data science, and HPC with Siemens’ strong position in mechanical and EDA design. Siemens’ outstanding technology, strategic customer relationships, and honest, technical culture is an excellent fit for Altair to continue its journey driving innovation with computational intelligence.

“By adding Altair’s highly complementary simulation portfolio,” Scapa says, “with strength in mechanical and electromagnetic capabilities, we are enhancing our comprehensive digital twin to deliver a full-suite, physics-based, simulation portfolio as part of Siemens Xcelerator. Altair’s data science and AI-powered simulation capabilities allow anyone, from engineers to generalists, to access simulation expertise to decrease time to market and accelerate design iterations. Additionally, Altair’s data science capabilities will unlock Siemens’ industrial domain expertise in product life cycle and manufacturing processes.”

Significant synergies and EPS accretive

The transaction will strongly increase Siemens’ digital business revenue by 8%, adding 600 million euros to Siemens’ digital business revenue of 7.3 billion euros as reported in fiscal year 2023. Siemens expects to achieve significant revenue synergies, especially from cross-selling of the highly complementary portfolios and from providing Altair full access to Siemens’ global footprint and global industrial enterprise and customer base with a revenue impact of more than $500 million midterm, growing to more than $1 billion long-term. Moreover, Siemens aims to achieve cost synergies on a short-term basis, with an EBITDA impact of more than $150 million by the second year post-closing.

The transaction is expected to be EPS (pre-PPA) accretive by Year Two post-closing. The acquisition will be fully cash-financed from Siemens’ existing resources and its capacity to fully finance the transaction based on Siemens’ strong balance sheet, as underlined by its exceptional rating, which Siemens is committed to maintain.

Preemptive deleveraging is supported by significant cash proceeds from the already closed Innomotics divestment. In addition, Siemens has substantial financing potential from the sale of shares in listed entities. Closing of the transaction is subject to customary conditions and is expected within the second half of calendar year 2025.

Altair Engineering, headquartered in Troy, Michigan, is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation and analysis, data science and AI, and high-performance computing. Out of its more than 3,500 employees, approximately 1,400 employees work in R&D.

Siemens strengthens its leadership in industrial software and AI with the acquisition of Altair Engineering.