(Oct 31): Siemens AG has agreed to buy software maker Altair Engineering Inc for an enterprise value of US$10 billion (RM43.79 billion), furthering the German engineering giant’s migration to higher-margin, software-driven product lines.

In its largest-ever acquisition, Siemens will pay Altair investors US$113 a share, according to a statement. The transaction, expected to close in the second half of 2025, represents a 19% premium to Altair’s Oct 21 closing price, the last trading day prior to reports regarding a possible acquisition.

Shares of Troy, Michigan-based Altair have gained 29% this year and closed at US$108.63 apiece on Wednesday, giving the company a market value of about US$9.3 billion. The equity value of the Siemens deal is US$10.6 billion, according to the statement, which confirmed an earlier report by Bloomberg News that the companies were nearing a deal. 

Altair fell about 4% after the close of regular trading, which had been halted earlier.

Led by founder and chief executive officer James Scapa, Altair provides engineering software to companies in the aerospace, automotive, energy and financial services industries. Demand for such tools is expected to grow with the increased adoption of artificial intelligence in everyday life. 

“We believe this combination of two strongly complementary leaders in the engineering software space brings together Altair’s broad portfolio in simulation, data science and HPC with Siemens’ strong position in mechanical and EDA design,” Scapa said in Wednesday’s statement, referring to high performance computing and electronic design automation tools.

Under CEO Roland Busch, Siemens has been exiting heavy equipment businesses and shifting its focus to software to catch up to the profitability of automation peers like Rockwell Automation Inc and Schneider Electric SE.

Siemens flagged in November last year that it could pursue larger acquisitions with a focus on software as it faced few financial restrictions. In August, Busch said in a Bloomberg TV interview that Siemens was looking for software companies or connected hardware manufacturers whose data can be used in cloud services. Though Siemens has made a couple of smaller acquisitions, larger deals could be “in the billions”, Busch said then. 

Busch called the Altair transaction a logical next step. It’s rare to find an asset in the highly consolidated realm of industrial software that’s complementary without raising antitrust issues, Busch said on Wednesday in an interview. 

“It’s like finding a diamond somewhere,” he said. “It fits perfectly in the areas where we want to invest and grow faster.”

Siemens has expertise in manufacturing design processes but lacks the range of simulation technology that Altair offers. For example, while Siemens already sells software used to design smart watches, it will now be able to simulate destruction tests for such products.

Busch’s drive to lift margins has come under strain as weak demand in China diminished returns in Siemens’ digital industries unit, which makes products to automate factories. Siemens lowered its margin outlook for the division and is hoping to partially offset the decline with strong revenue growth from grid infrastructure products that power data centres, especially in the US.

Also on Wednesday, Altair reported a 13% increase in revenue for the third quarter. The company had net income of US$1.8 million on revenue of US$151.5 million, according to the statement.

The takeover of Altair surpasses Siemens’s biggest-ever acquisition, the purchase of oil-and-gas equipment maker Dresser-Rand Group Inc for US$7.6 billion including debt in 2015, according to data compiled by Bloomberg.

Siemens, which benefits from a “very strong balance sheet”, will consider further acquisitions as possibilities arise, Busch said.

“There are some assets which are available in the market and there are still opportunities there,” he said. “I do believe my people have more ideas how we can spend money in the future.”

Uploaded by Tham Yek Lee