By GREGORY ZELLER //
Siemen’s AG has agreed to buy Melville software firm CD-adapco for $970 million.
And, no, the deal is not related to the death of the LI firm’s founder.
Peter “Steve” MacDonald, who launched CD-adapco over 35 years ago and was its chief executive and president, died in September. But news that Siemens will acquire his firm doesn’t indicate a panicked rush by a leaderless organization. Actually, it was part of the plan.
Maybe not Siemens and perhaps not precisely $970 million, but finding a buyer for the Melville-based global software provider was always CD-adapco’s long-term strategy, endorsed by MacDonald himself and his successor, spouse and interim CEO Sharron MacDonald.
That’s according to Vice President David Vaughn, who noted CD-adapco shareholders “had been discussing scenarios including the possible acquisition of the company for a while, even before Steve’s death.”
“This was definitely part of the strategy all along.”
The hefty price tag reflects not only CD-adapco’s impressive size – the global distributor boasts 3,200 customers and its own roster of international facilities, including large offices across Europe, Asia and the United States – but the importance of its proprietary engineering-simulation software suites.
Anton Huber, CEO of Siemens PLM Software’s automation-technology division, noted the particular value of CFD, CD-adapco’s computational fluid dynamics software, which uses advanced numerical analyses and algorithms to solve fluid-flow problems.
“By adding advanced engineering simulation tools such as CFD to our portfolio … we’re greatly enhancing our core competencies for model-based simulation,” Huber said in a statement, adding Siemens customers would also benefit from the addition of “experienced experts in the field.”
In addition to CFD-focused software simulations, CD-adapco simulations address solid mechanics, heat transfer, particle dynamics, electrochemistry, acoustics and other critical engineering factors. Klaus Helmrich, a member of Siemens’ managing board, called CD-adapco’s simulation-software capabilities “key to enabling customers to bring better products to market faster and at less cost.”
“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,” Helmrich said.
While industry analysts hailed the extension of Siemens’ Product Lifestyle Management Division – which includes the automation-technology works, also known as Siemens’ “digital factory” – insiders praised a move that will provide particular benefits for CD-adapco’s employees.
The 35-year-old software firm boasts 900 employees in 50 worldwide offices, and if all goes according to plan those workers will soon be employed by one of their industry’s largest and most-respected conglomerates.
“Siemens is a very large company,” Vaughn noted. “There are many benefits for the employees of CD-adapco.”
And virtually all of those 900 employees will be able to enjoy those benefits, the VP added, as “we have been assured there are no plans for any office closings and no plans for any layoffs.”
Instead, CD-adapco is planning for business-as-usual in Melville and everywhere else, right through the closing of the deal – targeted for early April – and beyond.
Business has been good. CD-adapco’s thousands of international customers include 14 of the world’s top 15 automakers. They will officially become Siemens customers upon the close of the deal, according to Siemens.
And CD-adapco reported over $200 million in annual revenues in each of the last five years, making that nearly $1 billion investment a fair bet.
Acquiring a firm with such a strong performance record is sensible all by itself, but CD-adapco and its pending parent share a lot more than healthy bottom lines. Not only do the companies enjoy overlapping industry networks – one of Siemens PLM Software’s technology partners is ANSYS, a Pennsylvania-based competitor of CD-adapco in the simulation-software market – but “it turns out our mission statements are very well aligned,” Vaughn noted.
“What we do fits very well with the mantra and the products at Siemens,” he said. “There’s a lot of similarity in our purposes.”
Customers of the two companies will have to wait to experience that synergy. It will take at least until April to cross the Ts, according to Vaughn, thanks primarily to “regulatory things that need to be taken care of” regarding the international sale.
But when the deal is completed, he added, customers will quickly reap the benefits.
“Assuming everything closes as it’s supposed to, our customers and Siemens customers should both enjoy a better selection of software, services and support of their own innovations,” Vaughn said. “There are a lot of benefits for both company’s customers.”