(Reuters) -Siemens will buy Altair Engineering for $10.6 billion, the American engineering software firm said on Wednesday, as it seeks to strengthen its presence in the fast-growing industrial software market.
The offer price of $113 per share represents a premium of about 18.7% to Altair’s closing price on Oct. 21, a day before Reuters first reported that the company was exploring a sale.
The deal for Michigan-based Altair is German company Siemens’s biggest acquisition since Siemens Healthineers bought medical device maker Varian Medical Systems (NYSE:) for $16.4 million in 2020.
Altair, whose simulation software helps predict how products would work in the real world, fits Siemens’s strategy of using its hardware and software to combine the real and digital worlds.
The German maker of trains and factory equipment has been trying to expand beyond its traditional industrial customers by boosting its digital offering to improve the performance of its production lines, trains and buildings.
Siemens competes with Rockwell Automation (NYSE:), Emerson (NYSE:) Electric and ABB (ST:) in the industrial software market which is currently worth an estimated $21.5 billion annually.
The market is estimated to increase to $46.6 billion by 2029 – an annual growth rate of 16.7% – according to Markets and Markets, a research company, as artificial intelligence and data analytics drive demand for software to manage complex interconnected systems.
Industrial automation is one of the core businesses within Siemens. CEO Roland Busch has said he wants to expand the software side of the business, although he has previously said he preferred small deals.
CFO Ralf Thomas said in an interview last month that Siemens wanted to gain a stronger foothold in factory automation in the United States to offset weakness in China, adding that Siemens was interested in software acquisitions.