Siemens-Mentor Graphics Spotlight

Mentor Graphics

Siemens Acquires Mentor Graphics


Financial Terms

  • Total Enterprise Value: $4.0 B, percent acquired: 100%
  • EV/LTM Revenue: 3.6x; EV/LTM EBITD: 25.2; EV/NTM EBTIDA: 12.5x


Transaction Highlights

  • On November 14, 2016, Siemens AG announced that it will acquire Mentor Graphics Corp for $37.25 in cash per share, a 21% premium on Mentor’s closing price on Friday.
  • Mentor Graphics, along with Synopsys (EV $8.2Bn) and Cadence Design Systems (EV $7.3Bn) (collectively known as the Big Three), is a leading provider of electronic design automation (EDA) software tools that are used to design and analyze semiconductor chips.
  • Despite being Europe’s largest industrial conglomerate, Siemens has identified software as an area of growth; only 5% of the company’s employees are software engineers, and only 5% of its FY 2016 revenue stemmed from software. Its acquisition of Mentor Graphics is a play to augment its product lifecycle management software division, as well as a response to increasing customer demand for more complex design capabilities.
  • Mentor Graphics, the smallest of the big three, players deciding to be acquired by Siemens may confirm speculations that that the EDA market is getting saturated.


A history of growth through M&A in the EDA Market

  • The EDA industry has historically been a hotbed for M&A activity, with the Big Three acquiring a total of 33 companies since 2013.
  • Driven by the increasing prominence of new markets like IoT and wearable technology, semiconductor manufacturing companies have been compelled to adopt EDA tools to reduce design time. This in turn has caused EDA providers to turn to M&A to keep up with increasing demand.
  • Mentor Graphics becoming a part of a larger platform gives it access to more funding for acquisitions.


Mentor Graphics’ Recent Acquisitions

Date Target Seller Seller Seller
10/10/16 Galaxy Semiconductor Solutions Galaxy Semiconductor Solutions provides test data analysis, yield management, and defect reduction software solutions for the semiconductor industry.
03/03/15 Tanner EDA, Inc Tanner Research, Inc Tanner EDA offers a complete line of software solutions for the design, layout, and verification of analog / mixed-signal integrated circuits and application-specific integrated circuits.
03/21/14 Berkeley Design Automation Inc Bessemer Venture Partners, IT-Farm Corporation, NTT Finance Corporation, Western Technology Investment 51.3 Berkeley Design Automation provides nanometer circuit verification solutions for analog, mixed-signal, radio frequency, and custom digital verification applications.
12/17/13 Oasys Design Systems, Inc Intel Capital, Xilinx Technology Ventures Oasys Design Systems develops physical register-transfer level exploration and synthesis tools that optimize at the gate-level to provide design capacity and synthesis runtimes.


TBP was NOT an advisor to this transaction