Siemens will purchase Altair for $10.6 billion as part of digital portfolio support

Siemens will buy Altair Engineering for $10.6 billion, the American engineering software firm said on Wednesday, as the German company seeks to strengthen its presence in the fast-growing industrial software market.

The offer price of $113 per share represents a premium of about 18.7% to Altair’s closing price on Oct. 21, a day before Reuters first reported that the company was exploring a sale.

The deal with Michigan-based Altair is Siemens’ largest acquisition since Siemens Healthineers acquired medical device maker Varian Medical Systems for $16.4 million in 2020.

Altair, whose simulation software helps predict how products will work in the real world, fits into Siemens’ strategy of using its hardware and software to merge the real and digital worlds.

The German train and factory equipment manufacturer is trying to go beyond its traditional industrial customers by increasing its digital offering to improve the performance of production lines, trains and buildings.

The transaction is expected to contribute to Siemens’ earnings per share within approximately two years from the completion of the deal, which is expected to be completed in the second half of 2025.

It will also increase Siemens’ digital business revenue by approximately 8% and add approximately 600 million euros ($651.36 million) to the company’s digital business revenue in fiscal 2023.

Siemens said the transaction will have a revenue impact of approximately $500 million per year in the medium term and more than $1 billion per year in the long term.

Siemens competes with Rockwell Automation, Emerson Electric and ABB in the industrial software market, currently worth an estimated $21.5 billion annually.

Industrial automation is one of Siemens’ core business areas. CEO Roland Busch said he wants to expand the software side of the business, although he has previously said he prefers smaller deals.

Siemens is looking to gain a stronger foothold in factory automation in the U.S. to offset weakness in China, and Siemens is interested in software acquisitions, CFO Ralf Thomas said in an interview last month.

Separately, Altair reported a 13% increase in revenue in the third quarter to $151.5 million.

Engineering software companies have become attractive acquisition targets as investors invest in companies that can benefit from the boom in artificial intelligence.

In January, chip design company Synopsys agreed to acquire design software company Ansys in a $35 billion cash and stock deal.

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