Siemens has agreed to acquire Altair Engineering Inc., a software provider in the industrial simulation and analysis market. The acquisition enhances Siemens’ computational science and artificial intelligence (AI) software capabilities. Siemens anticipates achieving cost and revenue synergies, with the transaction expected to positively impact earnings per share by the second year after closing.
Altair Engineering specialises in computational science and AI, offering software and cloud solutions in areas like simulation, data science, and high-performance computing. Founded in 1985 and headquartered in Troy, Michigan, Altair went public in 2017. The company employs over 3,500 people, with around 1,400 in research and development.
Altair shareholders will receive USD 113 per share, representing an enterprise value of approximately USD 10 billion. The offer price represents a 19 percent premium to Altair’s unaffected closing price on October 21, 2024, the last trading day before 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. 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,” said Roland Busch, president and CEO of Siemens AG. “It is a logical next step: we have been building our leadership in industrial software for the last 15 years, most recently, democratising 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. The transaction is expected to be EPS accretive two years post-closing,” said Ralf P. Thomas, CFO of Siemens AG.
“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. We have added thousands of customers globally in manufacturing, life sciences, energy and financial services, and built an amazing workforce, and innovative culture,” said James Scapa, Altair’s founder and CEO. “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.”
Scapa added that Siemens’ technology, strategic customer relationships, and honest, technical culture are an excellent fit for Altair to continue its journey of driving innovation with computational intelligence.
By adding Altair’s highly complementary simulation portfolio, 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 lifecycle and manufacturing processes.
Significant synergies and EPS accretive
The transaction will increase Siemens’ digital business revenue by over 8 percent, adding about EUR 600 million to Siemens’ digital business revenue of EUR 7.3 billion 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’s global footprint and global industrial enterprise and customer base with a revenue impact of more than USD 500 million p.a. mid-term growing to more than USD 1.0 billion p.a. long-term. Moreover, Siemens aims to achieve cost synergies on a short-term basis, with an EBITDA impact of more than USD 150 million p.a. by year two 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 maintaining.
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 the calendar year 2025.
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