Siemens Acquires Altair Engineering for $10.6 Billion

By John Revill and Emma-Victoria Farr
(Reuters) – Siemens is set to acquire Altair Engineering for $10.6 billion, enhancing its position in the rapidly expanding industrial software sector.

The acquisition offer is priced at $113 per share, an 18.7% premium over Altair's closing price on October 21, which was reported just before the potential sale was disclosed.

This acquisition marks Siemens's largest since purchasing Varian Medical Systems for $16.4 million in 2020. Based in Michigan, Altair specializes in simulation software that predicts product performance in real-world conditions, aligning with Siemens's strategy of integrating hardware and software to bridge the physical and digital realms.

Siemens, known for its trains and factory equipment, aims to diversify its offerings beyond traditional industrial customers, using digital solutions to enhance production line efficiencies, transportation systems, and building operations.

The deal is projected to impact Siemens' earnings positively within two years post-acquisition, with a closing expected in the latter half of 2025. The acquisition is also forecasted to increase Siemens's digital revenue by approximately 8%, contributing around 600 million euros ($651.36 million) to fiscal 2023 revenues.

In terms of long-term revenue, Siemens anticipates a $500 million annual impact in the mid-term and over $1 billion annually in the long-term from the transaction.

The industrial software market, currently valued at $21.5 billion annually, sees Siemens competing with companies like Rockwell Automation, Emerson Electric, and ABB.

CEO Roland Busch envisions expanding the software segment, although he has shown a preference for smaller deals in the past. CFO Ralf Thomas noted the need for a stronger presence in U.S. factory automation to counteract challenges in China, expressing interest in software-related acquisitions.

Altair also reported a 13% revenue increase in the third quarter, totaling $151.5 million. The rise in engineering software firms as acquisition targets is driven by investor optimism regarding their potential benefit from the AI boom. For context, in January, Synopsys announced its intent to acquire Ansys in a $35 billion deal.

($1 = 0.9211 euros)