The German engineering group Siemens (SIEGn.DE), boosts software business after agreeing to buy the U.S.-based Mentor Graphics (MENT.O). This $4.6-billion-dollar deal will not only strengthen its industrial software operations but also keeps it in line with today’s manufacturing technology.
Mentor Graphics creates software that supports semi-conductor organizations design and test their chips before manufacturing them. Siemens said that after buying Mentor Graphics, it has all the software required to develop the complex electronic machinery to satisfy its customers’ needs.
Siemens finance chief Ralf Thomas said that, “Our customers are driving a paradigm shift toward more and more complex and smart connected products such as autonomous vehicles.” He also believes that this deal between Siemens and Mentor Graphics will be the solution to supply such electronic machinery to this development.
According to Guenther Hollfelder, a Baader Helvea analyst, this acquisition of $4.6 billion dollars did not appear overly expensive when taking into the consideration of the valuation of 18.5 times operating profit. Siemens said it expects that within three years this acquisition will add earnings per share and lifts earnings before interest and tax by more than 100million euros within four years. This deal will increase its software revenue by about a third from 3.3billion euros, to approximately 6% of group revenue.