Machine Design
Siemens39s acquisition of Mentor Graphics is expected to broaden its solutions for quotsmartquot manufacturing and automation

Siemens's acquisition of Mentor Graphics is expected to broaden its solutions for "smart" manufacturing and automation.

Siemens Acquires Mentor Graphics for $4.5 Billion

German engineering-solutions company Siemens announced its biggest deal with an industrial software company since 2007 with the purchase of Mentor Graphics. Based in the United States, Mentor Graphics creates software that aids in the design and simulation of semiconductor chips used in automotive, aerospace, and other industries. It has 5,700 employees and expects to gain $1.22 billion in revenue for the year.  

The purchase was settled at $4.5 billion. Siemens offers $37.25 per share to Mentor Graphics shareholders, which adds a 21% premium to its Friday closing price through cash reserves. The acquisition is scheduled to close in the second quarter of next year.

Siemens expects the acquisition will help broaden its solutions for "smart" manufacturing and automation. By offering Mentor Graphics' software to manufacturers, it expects to become a key player in creating automated-car technologies and other technologies that are expected to see growth within the next 20 years.

Acquisitions over the past nine years have helped Siemens to strengthen its automated and software-based design solutions. In 2007, it bought UGS for $3.5 billion, and earlier this year, it bought CD-adapco for nearly $1 billion. Both of these companies are U.S. industrial design software companies that serve aerospace and automotive industries, and have helped to advance Siemens’ digital factory division as a major source of growth and profitability. 

Siemens software executive Chuck Grindstaff predicts that Siemens will benefit most from Mentor Graphics' experience in mechatronics design software, according to The Financial Times. "Mechatronics" is defined as the integration of electronics with mechanical parts like actuators or transducers, on any scale. Guillermo Peigneux Lojo, an analyst at UBS, predicts that Siemens will benefit mostly from Mentor Graphics’ automobile products and services.

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