By Christopher Alessi and Natascha Divac
FRANKFURT--German industrial giant Siemens AG Monday announced a multibillion-dollar deal to acquire Mentor Graphics Corp, in its latest move to beef up its software capabilities and widen its U.S. footprint.
Siemens said it offered $37.25 a share in cash, equivalent to a 21% premium to Mentor's closing price on Friday, giving the U.S. company an equity value of around $4 billion.
Wilsonville, Ore.-based Mentor sells software and hardware design-automation tools for the development and testing of advanced electronic systems.
"It's a perfect portfolio fit to further expand our digital leadership and set the pace in the industry," said Siemens Chief Executive Joe Kaeser.
The deal is the latest effort by Siemens to build up its profitable industrial software and factory automation business, which offers digital solutions to heavy industry manufacturing companies.
Earlier this year, Siemens acquired U.S.-based simulation software provider CD-adapco in a deal valued at roughly $1 billion. The integration of that privately held firm has helped to boost growth at Siemens' Digital Factory unit, which last week posted a 10% rise in profit for the fourth quarter of fiscal year 2016.
Since Mr. Kaeser took over the top job in 2013, he has actively moved to strengthen Siemens's presence in the U.S. market--the home turf of its main rival General Electric Co.--and apply the company's digital capabilities to its own diverse industrial businesses like power and gas in order to boost efficiency.
Mr. Kaeser's first big push in the U.S. came with its $7.6 billion acquisition of oil equipment maker Dresser-Rand last year.
Siemens said it expects to close the Mentor acquisition by the second quarter of calendar year 2017, from which point it should generate synergies of EUR100 million ($108.6 million) in earnings before interest and taxes within four years. The transaction should contribute to earnings per share growth within the first three years after the closing, the company added.
Mentor had over 5,700 employees at its fiscal year-end Jan. 31. The firm generated revenue of approximately $1.2 billion with an adjusted operating margin of 20.2%.
Mentor shareholder Elliott Management, which last month increased its stake in the electronics design company to 8.1%, has committed to support the transaction, the company said.
Write to Christopher Alessi at firstname.lastname@example.org and Natascha Divac at email@example.com
(END) Dow Jones Newswires
November 14, 2016 05:00 ET (10:00 GMT)
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