Siemens Seals the Deal with Mentor Graphics in a $4.5 Billion Acquisition
Siemens is set to acquire Mentor Graphics for $4.5 billion. Mentor Graphics specializes in design automation software for integrated circuits (ICs), systems-on-chips (SoCs), and automotive electronics. This acquisition will enable Siemens to provide a comprehensive integrated platform offering mechanical, thermal, electrical, electronic, and embedded software design capabilities.
“Siemens is acquiring Mentor as part of our Vision 2020 initiative aimed at setting the benchmark for the new industrial age,” said Joe Kaeser, president and CEO of Siemens. “This acquisition is a perfect fit for expanding our digital capabilities and leading the industry forward.”
By integrating Mentor’s electronics IC and system design, simulation, and manufacturing software, Siemens is amplifying its digital enterprise software portfolio. These tools are crucial for creating smart connected products, such as self-driving cars.
Walden Rhines, chairman and CEO of Mentor, added, “By combining our technology leadership and strong customer relationships with Siemens’ global reach and resources, we’ll better meet our customers’ growing needs. Siemens’ financial strength and commitment to innovation make them an ideal partner. We’re thrilled to join the Siemens family, as they share our values and focus on customer success.”
This merger will enhance Siemens’ offerings in mechanical, thermal, electronic, and embedded software tools, aiding customers in improving production efficiency and optimizing product operations. Klaus Helmrich, a member of Siemens’ managing board, noted, “Mentor’s established technology and talented team will bolster our industrial software portfolio, particularly in design, testing, and simulation of electrical and electronic systems.”
Siemens will purchase Mentor for $37.25 per share in cash, valuing the deal at $4.5 billion. This offer represents a 21% premium over Mentor’s closing price on November 11, 2016. Mentor’s board recommends that shareholders approve the merger, and Elliott Management, a significant shareholder, supports the transaction.
Integrating Mentor’s electronic design automation tools will significantly enhance Siemens’ product design capabilities, specifically in creating accurate digital twins of smart products and production processes. Mentor, headquartered in Wilsonville, Oregon, employs over 5,700 people across 32 countries and generated $1.2 billion in revenue for its fiscal year ending January 2016. Siemens anticipates these strong margins will continue, significantly benefiting its digital factory division’s product lifecycle management (PLM) software business.
Mentor serves an extensive and varied customer base, including over 14,000 global accounts across industries such as communications, computers, consumer electronics, semiconductors, aerospace, networking, multimedia, and transportation. The company focuses on strategic areas like IC design, testing, manufacturing, and automotive electronics.
Siemens predicts that the synergy from this acquisition will lead to revenue growth and improved margins, expecting a total earnings before interest and taxes (EBIT) impact of over €100 million within four years.
