"Siemens is acquiring Mentor as part of the Vision 2020 concept. Mentor is a perfect fit to expand our position in digital leadership and set the pace in the industry," said Joe Kaeser, CEO of Siemens.

© Siemens AG

Siemens and Mentor Graphics today signed an agreement for Siemens to acquire Mentor for $37.25 per share in cash. This represents an enterprise value of USD 4.5 billion. The offer price represents a premium of 21% over the closing price on November 11, 2016, the last trading day prior to the announcement. Mentor's Board of Directors supports the Siemens tender offer and recommends that shareholders approve and accept the agreement. Elliott Management, a Mentor shareholder, has committed to support the transaction.

With the acquisition, Siemens intends to expand its digital enterprise portfolio with Mentor's solutions for electronic IC and system design, simulation and manufacturing solutions, as these capabilities are needed today for connected smart products such as autonomous vehicles. The combination of the two companies' solutions will enable development tools for mechanical, thermal, electrical/electronic and embedded software.

Turnover of 1.2 billion US dollars

Mentor is headquartered in Wilsonville, Oregon, USA, and has employees in 32 countries worldwide. In the past fiscal year 2016, ending January 31, 2016, Mentor achieved sales of approximately USD 1.2 billion and an adjusted margin of 20.2%. Siemens expects these attractive margins to continue in the future. Mentor will thus make a significant contribution to the Product Lifecycle Management (PLM) software business in the Siemens Digital Factory Division, into which the company is to be integrated. According to Siemens, Mentor has a large and diversified customer base of key system and semiconductor suppliers with over 14,000 customers worldwide in the communications, computing, consumer electronics, semiconductor, networking and aerospace, multimedia and transportation industries. Mentor is recognized as a global leader in strategic industry segments such as IC design, test and manufacturing, electronic systems design and analysis, and emerging markets including automotive electronics.

The objectives of the takeover

"By combining Mentor's technology leadership and strong customer relationships with Siemens' global expertise and resources, we can better meet the growing needs of our customers and provide additional opportunities for our employees," said Walden C. Rhines, Chairman and CEO of Mentor.

Siemens expects to realize EBIT synergies of €100 million in the fourth year after closing from a combination of sales growth and expected margin improvement. In addition, the acquisition is expected to be accretive to Siemens' earnings per share in the third year after closing. Closing of the transaction is subject to customary conditions and is expected in the second quarter of calendar year 2017.