Shares of Mentor Graphics Corp. (NASDAQ: MENT) soared early on Monday on news that the company would be acquired. German-based Siemens agreed to acquire Mentor for a total of $4.5 billion, or about $37.25 per share, a premium of 21% to Friday’s closing price.
Mentor’s board of directors approved and declared advisable the merger agreement, and the board recommends the approval and adoption of the merger agreement by the holders of shares of Mentor common stock.
The transaction is still subject to customary closing conditions and is expected to close in the second quarter of calendar 2017.
The company has employees in 32 countries worldwide. In its fiscal year ended January 31, 2016, Mentor had over 5,700 employees and generated revenue of roughly $1.2 billion with an adjusted operating margin of 20.2%.
Siemens expects to achieve synergies through a combination of revenue growth and anticipated margin expansion, with a total EBIT impact of over €100 million within four years from closing the transaction. Additionally, the transaction is expected to be EPS accretive within three years from closing.
Joe Kaeser, president and CEO of Siemens, commented:
Siemens is acquiring Mentor as part of its Vision 2020 concept to be the Benchmark for the New Industrial Age. It’s a perfect portfolio fit to further expand our digital leadership and set the pace in the industry.
Klaus Helmrich, member of the Managing Board of Siemens, added:
With Mentor, we’re acquiring an established technology leader with a talented employee base that will allow us to supplement our world-class industrial software portfolio. It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems.
Shares of Mentor closed at $30.68, with a consensus analyst price target of $27.64 and a 52-week trading range of $16.10 to $30.93. Following the release of the report, the stock was up 19% at $36.51 in early trading indications Monday.