Siemens Decides To Buy Mentor Graphics

2023 Author: Hannah Pearcy | [email protected]. Last modified: 2023-11-26 11:39

Siemens is driving forward the implementation of its 2020 vision by further developing its industrial digital enterprise and expanding its portfolio for industrial software. On November 14, 2016, Siemens and Mentor Graphics signed an agreement to acquire Mentor from Siemens for $ 37.25 per share. That corresponds to an enterprise value of $ 4.5 billion. The offer price corresponds to a premium of 21% compared to the closing price on November 11, 2016, the last trading day before the announcement. Mentor's Board of Directors supports Siemens' takeover offer and recommends that shareholders approve and accept the agreement. Mentor shareholder Elliott Management Corporation has committed to support the transaction.

Driving digital enterprise

The acquisition extends Siemens' Digital Enterprise portfolio to include Mentor's solutions for electronic IC and system design, simulation and manufacturing solutions. These solutions are needed today for networked smart products such as autonomous vehicles. The combination of the companies enables development tools for mechanics, thermals, electrics / electronics as well as embedded software. According to Siemens, customers can increase their development speed, increase production efficiency and optimize the use of their products in practice. In this way, quality, efficiency, flexibility and security can be improved across all technical disciplines as well as the entire life cycle of a product and the digital enterprise can be advanced.

"Siemens takes on Mentor as part of the Vision 2020 concept and is therefore the benchmark for the new industrial age," said Joe Kaeser, CEO of Siemens. "Mentor is a perfect fit to expand our position in digital leadership and set the pace in the industry."

Klaus Helmrich, Member of the Siemens Board of Management, explains: “With Mentor we are taking on an established technology leader with talented employees who will complement our software portfolio. Mentor complements our mechanical and software offering with the design, testing and simulation of electrical and electronic systems.”

PLM software to be integrated in Digital Factory

Mentor is based in Wilsonville, USA, and has employees in 32 countries. In the past fiscal year 2016, which ended January 31, 2016, Mentor had sales of approximately $ 1.2 billion and an adjusted margin of 20.2%. Siemens expects these margins to continue in the future. In this way, Mentor is to contribute to the business with product lifecycle management (PLM) software in the Siemens Digital Factory division, in which the company is to be integrated. Mentor has a large and diversified customer base of key system and semiconductor providers with over 14,000 global customers in the communications, computer, consumer electronics, semiconductor, networking and aerospace, multimedia, and transportation industries. Mentor statesTo be the market leader in strategic industry segments such as IC design, testing and manufacturing, design and analysis of electronic systems and emerging markets including automotive electronics.

"By combining Mentor's technologies and close customer relationships with Siemens 'knowledge and resources, we can better serve our customers' needs and open up additional opportunities for our employees," said Walden Rhines, Chairman and CEO of Mentor. “Siemens is an ideal partner with financial strength and stability. The company's resources, along with additional investments, will enable us to innovate faster and accelerate our vision to create the development of complete automated design solutions for electronic systems. We are pleased that the transaction offers our shareholders immediate and definite value.”

Strengthen core competencies for product design

Siemens expects to achieve synergies in EBIT of EUR 100 million in the fourth year after closing the transaction from a combination of sales growth and expected margin improvement. In addition, the takeover should contribute to Siemens' earnings per share in the third year after closing. The closing of the transaction is subject to customary terms and is expected in the second quarter of the 2017 calendar year.

Mentor will be integrated into the PLM software business of the Siemens Digital Factory division. "With the electronic design automation solutions and the experts from Mentor in our team, we are strengthening our core competencies for the design of products - and are thus able to create a precise digital twin of every smart product and every production line," says Siemens - Board member Helmrich. (kj)