Metrology Meets Simulation: Hexagon Acquiring MSC Software

This week MSC Software Corporation, the company that brought you such products as Nastran, Patran, Marc, and Apex, announced that it had reached an agreement to be purchased by Hexagon AB for $834 million cash. Like all corporate acquisitions, this one is subject to clearance and standard regulatory filings, and is expected to be completed in April. For more than 50 years MSC has been a leading provider of CAE solutions, primarily simulation software for virtual product and manufacturing process development, and was one of the first 10 commercial software companies.

With 2016 proforma sales of $230, MSC will continue to run as an independent business unit within Hexagon’s Manufacturing Intelligence (HMI) division. HMI’s main businesses are in the automotive, aerospace, machinery, consumer electronics, and other discrete manufacturing markets. Process-oriented solutions are essential for manufacturers, and MSC’s products address key design and engineering processes for CAE.

“Our mission continues to be laser-focused on driving leadership in simulation tools, with solutions from materials to systems, said Dominic Gallello, President & CEO of MSC Software. “We will continue to work toward delivering breakthrough value to our customers. Although our mission and roadmap does not change, we anticipate that our ability to offer additional process oriented solutions from design to manufacturing will be enhanced by joining forces with Hexagon.”

As for the future of MSC Software, Mr. Gallello said, “Hexagon considers MSC’s management team, along with all MSC employees, to be an extremely valuable asset. No personnel changes are anticipated as a result of this transaction. Additionally, Hexagon is a strong believer in MSC’s product roadmap and growth plans. No changes to MSC’s current product roadmap are planned. MSC’s mission continues to be a leader in simulation tools, solutions from materials to systems and related services. Our aim is to continue to deliver breakthrough value to our customers.”

Hexagon AB is built upon three major business units: Leica Geosystems, Intergraph, and Hexagon Manufacturing Intelligence (HMI). MSC will be integrated within HMI, because of the obvious overlap in customer base between the two groups. MSC will operate independently while in coordination with other functions and business units to execute on technology and commercial synergies.

As it has done with its other acquisitions, Hexagon has no plans to eliminate or sell any products or business units, so it should be a good steward for MSC Software going forward.

“MSC represents a game-changer in our mission to deliver actionable manufacturing intelligence, taking us another step closer to realizing our smart connected factory vision in discrete manufacturing industries such as automotive and aerospace,” said Hexagon President and CEO Ola Rollén. “We can now leverage the data our MI division is generating to improve design choices and processes upstream in the workflow. The acquisition will also open up new markets and touchpoints for MSC via our Process, Power & Marine division.”

MSC’s simulation analysis capabilities are used by customers to optimize design for production. The acquisition strengthens Hexagon’s ability to connect the traditionally separate stages of design and production – integrating real-world data generated on the production floor with simulation data to further improve a customer’s ability to reveal and correct design limitations and production problems prior to manufacturing.

For some time, MSC Software’s intent has to “revolutionize” simulation, I don’t know if I’d go that far; however, I would agree that its products have definitely transformed some things in an area (CAE) that has been calling for some wake up and shake up.

As to whether the acquisition was a good decision, you need look no further than the market value of Hexagon, which went up $811 million in value the day of the announcement. The acquisition will further strengthen Hexagon’s smart connected factory strategy to deliver enterprise solutions within manufacturing verticals. Interestingly, when we spoke with Mr. Gallello, he said that simulation is a priority for MSC in a burgeoning vertical – additive manufacturing.

Finally, with the CAE acquisition of MSC Software, could this be the gateway to a big CAD acquisition to further round out HMI? Purely speculative, but I would say yes, CAD is Hexagon’s next conquest, and it won’t be a low-tier player.

Editor’s Note: Next week (February 5-8, 2017), we’ll be in Los Angeles as a Media Sponsor for SOLIDWORKS World 2017 at the Los Angeles Convention Center. We’re booking video interviews for the conference, and if you’re interested in conducting a video interview with me, contact Sanjay Gangal at sanjay.gangal@MCADCafe.Com. When edited, the video interviews are 4-7 minutes in length and are a great way to promote your company and its products and services. We hope to see you there at Booth #129! At the very least, stop by and say “Hi”!

Tags: 3D CAD, CAE, Dominic Gallello, Hexagon AB, metrology, MSC Software, simulation

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