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November 14, 2016
martinwolf  Transaction Analysis
Siemens to Acquire Mentor Graphics
 
Financial Information
  • Enterprise Value                           $4.0 billion
  • EV/LTM Revenue                         3.61x
  • EV/LTM EBITDA                          25.52x 
Transaction Facts
  • German engineering group Siemens AG (ETR: SIE) announced today that it would acquire Mentor Graphics Corp (Nasdaq: MENT), a developer of electronic design automation hardware and software.
  • The acquisition values the company at $37.25 per share in cash, or 21% above Mentor's Friday closing price. Mentor's shares immediately rose more than 18% in trading, with the company's stock up over 97% year to date.
  • The acquisition is expected to close by the second quarter of 2017, generating synergies of €100 million in EBIT within four years and contributing to EPS growth within three years of closing.

Heavy Industry Embraces Modern Connectivity

  • The New Normal: In pursuing and growing a digital-friendly strategy, Siemens joins peers such as General Electric and Robert Bosch GmbH. Digitization can bring process optimization, greater accountability and other efficiency measures, ultimately driving up value creating unique IP solutions.
  • Industrie 4.0: This digital strategy has been embraced by multiple trade groups - in the US there is the Industrial Internet Consortium, while the German government's "Industrie 4.0" is designed to preserve a competitive edge for German manufacturing.
  • Filling the Portfolio: Siemens earlier this year acquired CD-adapco, a US-based simulation software provider. for approximately $1 billion. That acquisition has led to stronger growth for Siemens' Digital Factory unit (which reported in a 10% rise in profit for the fourth quarter of Siemens FY 2016). Today, with the acquisition of Mentor Graphics, Siemens announced that it owns all software its customers need for the creation of cars, airplanes and trains.
For more information about this transaction,  click here to read the press release.

martinwolf was not the advisor in this transaction.

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With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. 

 

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