Europe’s largest industrial group is trying to increase its profitability (Siemens)

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European giant Siemens buys US software engineer for nearly $1bn

26 January 2016 | By David Rogers | 0 Comments

Siemens confirmed yesterday that it will buy the US software firm CD-adapco for $970m.

The company produces applications for computer-aided engineering with a focus on simulation programs.

Klaus Helmrich, Siemens’ managing director, said in a statement: “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. Simulation software is key to enabling customers to bring better products to the market faster and at less cost.

“With CD-adapco, we’re acquiring an established technology leader that will allow us to supplement our world-class industry software portfolio and deliver on our strategy to further expand our digital enterprise portfolio.”

CD-adapco, based in Melville, New York State, has more than 900 employees and annual revenues of close to $200m.

The opportunities that come with the acquisition by Siemens are endless– Sharron MacDonald, CD-adapco’s chief executive

Siemens said CD-adapco had increased its revenue by more than 12% in each of the past three fiscal years.

The company’s software is used by 14 of the 15 largest carmakers, by all of the top 10 suppliers to the aerospace industry and by nine of the 10 largest manufacturers in the energy and marine sectors.

Sharron MacDonald, CD-adapco’s chief executive, said: “The opportunities that come with the acquisition by Siemens are endless. The vision of our founders will be realised in the integration of these world-class engineering and manufacturing technologies and a business strategy that will allow engineering simulation to impact more products and companies than ever before.”

Anton Huber, chief executive of Siemens’ Digital Factory Division, said the acquisition would boost the firm’s “competencies for model-based simulation that creates a very precise digital twin of the product.”

Siemens, which is Europe’s largest industrial company, said it expected “synergy impact” on revenue to be in the “mid-double-digit million range” within five years of finalising the deal, which is expected to be in the second half of fiscal year 2016.

Siemens’ first quarter results for the 2016 financial year were also released yesterday. They showed a 22% rise in orders to $24.5bn and a 4% rise in earnings to $19.5bn relative to the first quarter of 2015, excluding currency effects. Its industrial profit rose 10% to $2.2bn, and its share price jumped 7%.

However, the Digital Factory division, which Siemens hopes will help it narrow a wide profitability gap with GE, lost almost 2 percentage points from its profit margin owing to slowing demand from China.