Cadence acquires BETA CAE Systems for $1.24B in cash and stock

Cadence Design Systems announced it has entered into a definitive agreement to acquire BETA CAE Systems International AG, a system analysis platform provider of multi-domain, engineering simulation solutions. The addition of BETA CAE’s proven technologies and talent will accelerate Cadence’s Intelligent System Design strategy by expanding its multiphysics system analysis portfolio and enabling entry into the structural analysis segment, unlocking a multi-billion-dollar incremental TAM opportunity. Under the terms of the definitive agreement, Cadence will pay approximately $1.24B for the transaction, with 60% of the consideration to be paid in cash and 40% to be paid through the issuance of Cadence common stock to current BETA CAE shareholders. In conjunction with the transaction, Cadence expects to obtain new debt financing to fund a portion of the cash component of the purchase price. Cadence plans to use free cash flow generated by its existing operations to rapidly pay down debt incurred to fund the transaction, while also maintaining share repurchases. Increasing system complexity and time-to-market pressures from accelerating mechanical and electrical hyperconvergence, along with the digital transformation in multiple industries, are driving the need for multiphysics simulations early in the design cycle. Over the past few years, Cadence has expanded its system analysis portfolio to build out a comprehensive multiphysics platform including electromagnetics, electrothermal and computational fluid dynamics CFD solutions, and with BETA CAE, Cadence will enter structural analysis, the largest system analysis segment…The acquisition is expected to close in the second quarter of 2024, subject to receipt of regulatory approvals and other customary closing conditions. BETA CAE has annual revenue of about $90M, and Cadence expects BETA CAE to contribute approximately $40 million to 2024 revenue. Cadence expects the transaction to be approximately 12 cents dilutive to its 2024 earnings per share and to become accretive in 2025 , based on Cadence’s debt repayment and share repurchase plans.