MUNICH -- Siemens announced today it will acquire Mentor Graphics for $4.5 billion in cash, ending speculation of the future of the electronics software developer.
Under terms of the agreement, Siemens will pay $37.25 per share for Mentor, a 21% premium over Mentor's closing price on Nov. 11. Mentor's board has approved the merger, which must be voted on by shareholders. Elliott Management, a hedge fund that owns more than 8% of the company, reportedly supports the transaction.
Siemens expects the deal to increase its earnings before income taxes by some 100 million euros ($107 million) within four years of closing.
Mentor employs 5,700 workers worldwide and had reported revenues in its last fiscal year of approximately $1.18 billion with an adjusted operating margin of 20.2%. It will become part of Siemens' Product Lifecycle Management business of the Siemens Digital Factory Division, which also includes Tecnomatix.
In a statement, Siemens managing board member Klaus Helmrich said, "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."
Mentor is the owner of such brands at Pads, Xpedition, Valor and Flotherm, among others.
Read Mike Buetow's commentary on the deal here.