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Done! Siemens closes Mentor acquisition

Done! Siemens closes Mentor acquisition

Mar 30, 2017 | Hot Topics

Siemens just announced that it has closed the Mentor Graphics acquisition, adding all sorts of EDA and CFD goodness to its portfolio. A quick recap of the particulars:

  • On November 14, 2016, Siemens announced that it would offer Mentor shareholders $37.25 per share in cash, which represents an enterprise value of $4.5 billion. That was a 21% premium to Mentor’s closing price on November 11, 2016.
  • Why do the deal? Klaus Helmrich, member of the Managing Board of Siemens. said at the time, “With Mentor, we’re acquiring an established technology leader with a talented employee base that will allow us to supplement our world-class industrial software portfolio. It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems.”

As part of today’s announcement, Siemens released a letter to customers; the most important points are:

  • Mentor becomes part of the Siemens PLM Software business unit, which is part of the Siemens Digital Factory division
  • Siemens says it now “delivers the most comprehensive digital design portfolio—from integrated circuit design, to system design and the complete Digital Enterprise. Mentor’s system design product portfolio significantly adds to Siemens’ Digital Enterprise vision, strengthening the system of systems and model-driven design methodologies with Mentor’s electronic system design expertise. This directly addresses the rapid growing electronic content in today’s complex systems. The combined companies’ simulation capabilities provide the most comprehensive solution for a multi-physics and electronic Digital Twin.”
  • But it’s about more than a digital twin of a mechanical object that, increasingly, has some electronics content. Today’s announcement (no surprised here) also speaks about Mentor’s Integrated Circuit (IC) design tool segment: “This segment offers exciting growth opportunities for Siemens and will expand even further with the rise of Internet of Things, high-speed communications and the cloud. Siemens is fully committed to further investing in Mentor’s integrated circuit design and embedded software solutions to ensure continued technology and market leadership.” [Emphasis added by me to make sure you see it.–Ed.]
  • The companies say it’s early days regarding the details of integration: “Siemens PLM Software and Mentor are still early in the process of combining the organizations and exploring the many ways our two organizations can work together. Siemens has an excellent track record of developing and growing the businesses it acquires and, importantly, retaining the culture that made those companies successful. It will be no different for Mentor. Siemens is committed to retaining the innovative culture that has led to Mentor’s success.”
  • The letter is signed by Wally Rhines, CEO, Mentor Graphics, and Tony Hemmelgarn, CEO, Siemens PLM Software. It doesn’t comment specifically on whether Mr. Rhines is staying with Siemens, but he told EETimes in December that he had not plans to retire and would stay with Siemens “as long as [he] can contribute.”

If you’ve tuned into any of Siemens’ events lately, you’ll have noticed that the company has placed huge emphasis on being one of the world’s top 10 software companies; this deal expands its software revenue to around $4.7 billion (Siemens software, including PLM, is said to have revenue of $3.5 billion in FY2016 while Mentor had revenue of about $1.2billion is its FY16 — different fiscal years, so this is an estimate.) If we look at Wikipedia’s list of the top 10 software companies, Siemens AG just pushed poor Amadeus IT Holdings of Spain off the list to take the #10 spot. It joins #1 Microsoft, #2 Oracle, then SAP, VMware, Adobe, HCL, Fiserv, and Symantec — quite an impressive list. Let’s see how it climbs up to 9, then 8, then …

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