Siemens to buy Mentor Graphics in $4.5bn deal

Siemens has entered into an agreement to buy US-based Mentor Graphics for $37.25 per share in cash, which is an enterprise value of $4.5bn.

The offer price represents a 21% premium to the Mentor closing price on November 11, which was the last trading day before the announcement.

Joe Kaeser, president and chief executive officer of Siemens, said: “Siemens is acquiring Mentor as part of its Vision 2020 concept to be the benchmark for the new industrial age. It's a perfect portfolio fit to further expand our digital leadership and set the pace in the industry.”

“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," said Klaus Helmrich, member of the managing board of Siemens.

Siemens expects to achieve synergies through a combination of revenue growth and anticipated margin expansion, with total earnings before interest and taxes impact of over €100m within four years from closing the transaction.

In addition, the deal is expected be accretive to earnings per share within three years from closing, which is due in the second quarter of calendar 2017.

Oregon-based Mentor, which generated revenue of around $1.2bn in the year ended 31 January, will be part of the PLM software business of Siemens' Digital Factory division.

At 1038 GMT, Siemens shares were up 1.5% to €109.80, while Mentor shares surged 19% to $30.68 in pre-market trade.