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SAN JOSE - Cadence Design Systems, Inc. (NASDAQ:CDNS) announced it has entered into a definitive agreement to acquire Hexagon AB’s Design & Engineering business, including its MSC Software operations, for approximately €2.7 billion.
Under the terms of the agreement, Cadence will pay 70% of the consideration in cash and 30% through the issuance of Cadence common stock to Hexagon. The transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and customary closing conditions. Based on InvestingPro’s Fair Value analysis, Cadence appears to be trading above its Fair Value, though the company has demonstrated strong revenue growth of 22.3% over the last twelve months.
The acquisition will expand Cadence’s system analysis portfolio with Hexagon’s mechanical simulation capabilities, particularly its flagship products MSC Nastran and Adams, which are widely used in structural and multibody dynamics simulation for aerospace and automotive applications.
The Hexagon business generated approximately $280 million in revenue in 2024 and has over 1,100 employees across multiple global sites. Its customer base includes major aerospace and automotive companies such as Volkswagen Group, BMW, Toyota, Lockheed Martin, BAE and Boeing.
"By adding Hexagon’s D&E world-class simulation capabilities, we will expand our vision of Intelligent System Design to encompass the full spectrum of physical behavior—from electromagnetics and fluids to structures and motion," said Anirudh Devgan, Cadence’s president and chief executive officer, in a press release statement.
The deal follows Cadence’s 2024 acquisition of Beta CAE and represents a further expansion into the structural analysis market. According to Cadence, the combined technologies will enable the company to deliver a comprehensive multiphysics platform for customers designing complex systems in automotive, aerospace, industrial and robotics sectors.
The acquisition aims to address the growing industry need for integrated electrical-mechanical design solutions and multiphysics simulations earlier in the design cycle. With revenue reaching $5.1 billion in the last twelve months and 14 analysts revising earnings estimates upward, Cadence shows strong momentum. For deeper insights into Cadence’s growth prospects and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Cadence Design Systems reported a strong second-quarter performance, with revenue reaching $1.275 billion, surpassing consensus estimates of $1.250 billion and marking a 20% year-over-year growth. The company’s adjusted earnings per share were $1.65, exceeding the $1.56 consensus estimate, representing a 29% increase from the previous year. Following these results, Stifel raised its price target on Cadence Design to $395 from $350, maintaining a Buy rating, while Berenberg increased its price target to $400 from $330, also maintaining a Buy rating. Cadence has completed its acquisition of the Arm Artisan foundation IP business, enhancing its design IP portfolio and strengthening its system-on-chip design capabilities. Additionally, Cadence unveiled a new Dynamic Power Analysis App for its Palladium Z3 Enterprise Emulation Platform, developed in collaboration with NVIDIA, to enable hardware-accelerated dynamic power analysis for AI designs. Stifel reiterated its Buy rating and $395 price target on Cadence, emphasizing the company’s expanding role in AI-first silicon and system design. These developments reflect Cadence’s strategic focus on high-growth areas such as AI and custom silicon.
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