Siemens beefs up industrial software with CD-adapco

Mon Jan 25, 2016 1:27pm EST
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MUNICH, Germany (Reuters) - Germany's Siemens (SIEGn.DE: Quote) has agreed to buy U.S. engineering software firm CD-adapco for $970 million, it confirmed on Monday, beefing up its core industrial business with the latest in a string of acquisitions in the area.

Under the leadership of former finance chief Joe Kaeser, the engineering group has shed the last of its consumer businesses to focus on its core strengths including industrial automation, where it needs ever more digital competence to keep its edge.

Melville, New York-based CD-adapco makes computer programs used by engineers to simulate the inner workings of an engine, in particular the flow of liquids and gases. It will complement Siemens' product lifecycle management (PLM) software offering.

"As part of its Vision 2020, Siemens is acquiring CD-adapco and sharpening its focus on growth in digital business and expanding its portfolio in the area of industry software," said Klaus Helmrich, member of the Managing Board of Siemens."

Reuters reported on Sunday that Siemens had agreed to buy the privately held company for close to $1 billion.

Established in 1980 and still controlled by its founders, CD-adapco has 900 employees in 50 offices and had $200 million in annual revenue and an annual growth rate of 15 percent for the past five years, according to its website.

Its main competitor in engine simulation software is Ansys Inc (ANSS.O: Quote), which trades at about 9 times trailing 12-month sales, according to Thomson Reuters Data. Siemens is paying 5 times sales.

"Post the move into PLM software, this looks to be a logical extension to the Digital Factory portfolio in our view," Barclays analysts wrote in a note.

PLM software is designed to manage the entire lifecycle of a product from conception through to service or disposal, helping companies to speed up development and cut costs.   Continued...

A Siemens logo is pictured on an office building of Siemens AG in Munich in this May 30, 2014 file photo. REUTERS/Lukas Barth