Siemens To Buy Altair For $10.6B To Boost Industrial Software Portfolio

German-based Siemens AG said it signed a deal to buy U.S.-based Altair Engineering for about $10.6 billion to strengthen its presence in the industrial software market.

The acquisition of Altair, a computational science and artificial intelligence software provider, strengthens Siemens' position as a leading technology company and further cement Siemens among the leaders when it comes to industrial software, Siemens said in a press release.

Siemens said shareholders of Altair will receive $113 per share in cash, which represent an enterprise value of approximately $10 billion and a 19% premium to Altair's closing price on October 21, 2024.

Roland Busch, President and CEO of Siemens AG, said that the acquisition of Altair will be a significant milestone for the company.

"...This strategic investment aligns with our commitment to accelerate the digital and sustainability transformations of our customers by combining the real and digital worlds," Busch noted.

"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," he added.

According to Reuters, the deal with Altair is considered as the biggest acquisition by Siemens since it bought Varian Medical Systems in 2020 for $16.4 billion.

Michigan-based Altair develops simulation software that could help in predicting how products would function in the real world. This is compatible with the strategy employed by Siemens where it would be using both hardware and software to combine the digital and the real world.

"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," Siemens said.

Altair's data science and AI-powered simulation capabilities 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.

Siemens has been pouring efforts to expand its business beyond its traditional industrial customers. It is now working on its digital offering that could help improve the performance of its trains, buildings and production lines.

The deal is anticipated to increase the earnings per share of Siemens in about two years from the closure of the deal, which is expected to happen in the second half of 2025.

In addition, the deal is expected to increase the digital business revenue of Siemens by approximately 8%. Siemens also expects to achieve significant revenue synergies especially from cross-selling with a revenue impact of more than $500 million per year mid-term growing to more than annual revenues of $1 billion in long-term.

Siemens also targets cost synergies on a short-term basis, with an EBITDA impact of more than $150 million per annum by year two post-closing.