By acquiring one of ECAD’s giants, Mentor Graphics, Siemens continues to round out its design capabilities far beyond its MCAD roots as part of its Vision 2020 quest. Siemens says the acquisition is an extension of “shaping the Digital Industrial Enterprise by expanding its portfolio for industrial software.”
Under terms of the agreement, Siemens will acquire Mentor for $37.25 per share in cash, which represents a value of $4.5 billion. The offer price represents a 21% premium to Mentor’s closing price on November 11, 2016, the last trading day prior to the announcement.
Major Mentor shareholder Elliott Management has committed to support the transaction. In many ways, I don’t think Mentor had much of a chance of fending off the acquisition, as its profits were minuscule (and had been for some time), and got strong-armed by Elliott who owns a good chunk (~8%) of Mentor. By the way, Elliott blessed the offer.
Elliott Management, run by billionaire Paul Singer, said when it raised its stake it saw numerous opportunities to boost Mentor’s “deeply undervalued” shares and had started talks with the company’s management and board. According to the company, the acquisition is a “great outcome” for Mentor shareholders as the company will benefit from Siemens’s increased scale and greater resources.
The acquisition extends Siemens’ Digital Enterprise Software portfolio with Mentor’s electronics IC and systems design, simulation, and manufacturing software – capabilities essential for smart connected products, such as autonomous vehicles.
“Siemens is acquiring Mentor as part of its Vision 2020 concept to be the Benchmark for the New Industrial Age. It’s a perfect portfolio fit to further expand our digital leadership and set the pace in the industry,” said Joe Kaeser, President and CEO of Siemens AG.
“With Mentor, we’re acquiring an established technology leader with a talented employee base that will allow us to supplement our world-class industrial software portfolio. It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems,” said Klaus Helmrich, member of the Managing Board of Siemens.