Siemens Acquires Altair Engineering for $10.6 Billion, Eyes AI-Driven Expansion in Industrial Software

Siemens AG announced a $10.6 billion agreement to acquire U.S.-based engineering software company Altair Engineering, marking its biggest purchase since the $16.4 billion acquisition of medical device giant Varian Medical Systems by its Siemens Healthineers division in 2020. The deal, hailed by analysts for bolstering Siemens’ digital capabilities, will expand the company’s footprint in the rapidly growing industrial software market and enhance its digital industries division with AI-powered design and simulation solutions.

Altair’s software, renowned for predicting real-world product performance, aligns with Siemens’ strategy of integrating digital solutions to optimize hardware in production, transportation, and building infrastructure. The deal represents a significant premium, with Siemens offering $113 per share—a nearly 19% increase over Altair’s closing price on October 21. Despite concerns from some analysts over the high price, Alpha Wertpapierhandel analysts stated the acquisition could ultimately support Siemens’ digital expansion and reinforce its competitiveness.

“Altair adds AI-powered design and simulation,” Alpha commented, noting that in the long run, Siemens’ latest purchase could prove to be a wise choice, strengthening its position in an evolving digital landscape.

Jefferies analyst Simon Toennessen agreed, emphasizing that the acquisition broadens Siemens’ expertise in artificial intelligence and high-performance computing, setting Siemens on more even footing with industry giants like Synopsys, which recently acquired design software company Ansys for $35 billion, and Cadence Design Systems.

Siemens’ Move to Outpace Competition in a Booming Market

The acquisition enhances Siemens’ position in the competitive industrial software market, which includes key players like Rockwell Automation, Emerson Electric, and ABB. The sector, estimated to be worth $21.5 billion, is anticipated to grow by 16.7% annually as companies look for AI-driven solutions to improve operational efficiencies across sectors. Altair’s simulation tools, which Siemens will integrate to leverage digital twin technology and predictive modeling, position Siemens to appeal not only to traditional industrial clients but also to emerging markets driven by AI and automation.

With the digital and industrial realms converging, Altair fits Siemens’ ongoing strategy of blending real and digital worlds to streamline production and enhance efficiency. The acquisition is expected to contribute to Siemens’ earnings per share within two years of closing in late 2025, adding around €600 million ($651 million) in digital revenue for fiscal 2023 and ultimately generating $1 billion annually in the long term.

The investment bolsters Siemens’ capacity to cater to industries like automotive, aerospace, and beyond, where advanced simulation and AI-driven design have become essential tools. Traders suggest Siemens’ shares, down 0.8% today, may be reflecting the acquisition cost, although the long-term gains from Altair’s technology and revenue potential could improve Siemens’ valuation in the years ahead.

Siemens Healthineers: Growth in Medical Device Technology

Siemens’ healthcare division, Siemens Healthineers, made headlines in 2020 with its acquisition of Varian Medical Systems, marking a substantial expansion into medical technology. This acquisition followed global trends in health tech investment and highlighted a critical strategy in Siemens’ portfolio diversification. Analysts predict this value-seeking trend will persist in the medical device industry as advancements in diagnostics, personalized medicine, and AI-driven imaging continue to reshape healthcare solutions.

As the demand for innovative healthcare technology rises, major players like Siemens are expected to continue seeking acquisitions that support cutting-edge solutions. This momentum, compounded by post-pandemic growth in the global health sector, suggests that competition to acquire pioneering firms will remain fierce as the industry evolves.

Outlook: Siemens’ Path Forward

With this strategic acquisition of Altair, Siemens has underscored its commitment to expanding digital and AI-driven capabilities in both the industrial and healthcare sectors. In an industry where software innovation and predictive modeling are critical for operational efficiency and technological advancement, Siemens’ integration of Altair could set a new standard.

The acquisition is anticipated to catalyze Siemens’ growth in AI-powered solutions and real-world simulations, while Siemens Healthineers’ foothold in medical devices will likely continue to expand. For Siemens and the wider engineering and health tech sectors, the hunt for transformative value appears poised to accelerate in the years ahead.

Thomas Lin
Financial Desk