Siemens Boosts Software Operations With £3.6bn Mentor Graphics Buy

Siemens has acquired Oregon-based Mentor Graphics, which makes tools for designing semiconductors, as the German engineering giant looks to expand its software operations.

The $4.5 billion (£3.6bn) cash deal follows Siemens’ purchase earlier this year of CD-adapco, a privately held US engineering software firm, for nearly $1bn.

Software expansion

The buy will “complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems”, said Siemens management board member Klaus Helmrich.

Mentor makes design automation software for semiconductors including integrated circuit and system-on-chip designs and automotive electronics.

As of the end of January 2016 the company had more than 5,700 staff in 32 countries and revenues of about $1.2bn, according to regulatory filings.

Activist investors

Currently only 5 percent of Siemens’ 350,000 staff are software engineers, and the company’s Vision 2020 strategy marks software as a key focus.

In the meantime it is looking to spin off certain hardware operations, including a proposed spin-off of its heathcare business.

Mentor has been under pressure to make changes by activist investors in recent years and was the subject of a takeover attempt by Australian fund management firm Cadence in 2008.

Elliott Management took an 8 percent stake in the company in September, and in response Mentor engaged Bank of America to explore its options.One of those options was to sell itself to a customer such as Siemens.

Siemens said Elliott Management had agreed to support the deal.

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