Siemens Strengthens Leadership in Industrial Software and AI with Acquisition of Altair Engineering

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Siemens has signed an agreement to acquire Altair Engineering Inc., a leading provider of software in the industrial simulation and analysis market. Altair shareholders will receive US$113 per share, representing an enterprise value of approximately $10 billion. The offer price represents a 19% premium to Altair's unaffected closing price on October 21, 2024, the last trading day prior to 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, democratizing 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. Siemens' outstanding technology, strategic customer relationships, and honest, technical culture is an excellent fit for Altair to continue its journey 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 strongly increase Siemens' digital business revenue by +8%, adding 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 maintain.

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 calendar year 2025.