Siemens’ Purchase of ALTAIR Is Completed: Will PLM Chief
TONY HEMMELGARN Manage to Make Another ”Mentor SUCCESS”?
The deal in which Siemens is buying AI, HPC, simulation and analysis developer Altair is now completed. It is a big deal that will give Siemens the commercial push it needs to, once consolidated, give the company a clear position as market leader in the PLM area, and also provide leading cutting-edge AI, HPC and simulation technology. Together with what Siemens itself has developed in the CAE domain within the Simcenter portfolio, it will also become the market's first serious challenger to Ansys' hegemony as market leader in the simulation domain. Just over $10 billion was spent to secure the ownership, a lot of money of course, but there are indications that this could be a brilliant deal for Siemens. How then?
It is clear that the CEO of the PLM division, Tony Hemmelgarn, has made great deals before. For comparison, the company paid $4.5 billion for Mentor Graphics in 2017. At the time it was a giant deal, but has since then proven to be a success for several reasons. Commercially, because the EDA (Electronic Design Automation) side, which Mentor addressed, currently accounts for around a third of the PLM division's revenue. But also, because the technology and solution packages built around EDA are not only the market's best integrated into the entire PLM package, but also have an impressive breadth in terms of functionality.
Nor are large deals in the CAE domain new to Siemens' acquisition history. For example, it previously bought CD-adapco for around $1 billion in 2016, when it acquired the flagship in multiphysical CFD (fluid dynamics) STAR-CCM+. Or the purchase of LMS, developer of test and simulation software, in 2012, for nearly $700 million. There are more examples, but they end up being successful in terms of integration and in line with a consistent strategy over time.
In a comment on the closing of the Altair acquisition Hemmelgarn states that the purchase of Altair is the largest in the company's history. He also links it to Siemens' development of its comprehensive digital twin concept.
“Right, and our strategy has not changed – we remain committed to building the most comprehensive Digital Twin. In that spirit, Altair’s capabilities in simulation, high-performance computing (HPC), data science and artificial intelligence will complement our existing strengths in mechanical and EDA design. Together, we will enhance our Digital Twin to deliver a complete, physics-based simulation portfolio as part of Siemens Xcelerator.”
He adds that a new portfolio organization is now being introduced: “Simulation, which will consist of the entire Altair product portfolio organization, together with our Simulation and Test Solutions (STS) group, led by Jean-Claude Ercolanelli. This new organization will be led by Sam Mahalingam, Altair’s CTO.”
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