Cadence Completes Acquisition of Hexagon's Design and Engineering Business, Advancing Leadership in Physical AI and Multiphysics

Complementary leading technologies combine to deliver comprehensive physical system design and AI-driven analysis solutions

Cadence (NASDAQ:CDNS) today announced that it has completed its previously announced acquisition of Hexagon AB's Design and Engineering ("D&E") business, significantly expanding its System Design and Analysis (SDA) portfolio and strategically positioning the company to capitalize on the Physical AI opportunity.

The acquisition accelerates Cadence's Intelligent System Design strategy by combining its compelling multiphysics portfolio with Hexagon D&E's leadership in structural analysis, acoustics and multibody dynamics. The integration of Hexagon D&E's flagship MSC Software solutions—including MSC Nastran™ and Adams™—with Cadence's leading multiphysics portfolio spanning electronics, computational fluid dynamics (CFD) and BETA CAE's structural pre and post processing technologies, will enable Cadence to deliver a comprehensive end-to-end multiphysics simulation platform —elevating the industry standard for integrated design and analysis solutions and enabling more seamless system level innovation.

"This acquisition marks a major milestone in advancing our vision for intelligent system design," said Anirudh Devgan, president and CEO of Cadence. "By combining our industry-leading computational software and AI-driven design expertise with MSC Software's world-class structural and physics-based analysis technologies, we're empowering customers to push the boundaries of what's possible—from autonomous systems and advanced robotics to the future of transportation."

The combined portfolio further positions Cadence at the forefront of the emerging Physical AI era by tightly coupling high-fidelity, physics-based simulation with AI-driven design exploration. This will enable customers to create virtual representations of real-world systems that accurately predict system behavior under complex operating conditions. With advanced capabilities spanning motion, vibration, structural response and fluid-structure interactions, engineers can generate richer, physically grounded data to train and validate AI models, improving the performance and reliability of intelligent vehicles and industrial systems.

The purchase price of approximately €2.7 billion, which includes an estimated €150 million of transaction-related taxes owed by the acquired entities, is structured as 70% in cash and 30% in Cadence common stock.

Under its financial model, Cadence expects the incoming business to add an incremental $160 million to its 2026 revenue. On a non-GAAP basis, Cadence expects the transaction to be approximately 28 cents dilutive to its 2026 earnings per share, becoming accretive in 2027.

Please visit Cadence's website for more information on this acquisition.

About Cadence

Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence's Intelligent System Design strategy, are essential for the world's leading semiconductor and systems companies to build their next-generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2024, Cadence was recognized by the Wall Street Journal as one of the world's top 100 best-managed companies. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding talent, technologies and product offerings, business strategy, plans and opportunities, industry and market trends, estimated tax liabilities and the expected benefits and impact of the transaction and combined business on Cadence's growth and financial outlook, including expected revenue contribution and earnings impact, which assume Cadence will use free cash flow generated by its pre-existing operations for debt repayment and share repurchases. Forward-looking statements are based on current expectations, estimates, forecasts, and projections. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," "shall," "incoming" and variations of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a number of risks, uncertainties, and other factors, many of which are outside Cadence's control. For example, the markets for SDA technology or Cadence's products and services may develop more slowly than expected or than they have in the past; operating results and cash flows may fluctuate more than expected; Cadence may fail to integrate the D&E business; Cadence may fail to realize the anticipated benefits of the acquisition; Cadence may incur unanticipated costs or other liabilities in connection with acquiring or integrating the D&E business and its exposure to tax and other liabilities may be greater than anticipated; Cadence may not repay debt incurred to fund the acquisition or make share repurchases as anticipated, including as a result of insufficient free cash flow or use of cash for other purposes; the consummation of the acquisition may negatively impact relationships with third parties, including employees, customers, partners, and governmental authorities; Cadence may be unable to motivate and retain key personnel; changes in or failure to comply with legislation, government regulations or other legal requirements could affect Cadence's business, operating results, reputation and financial condition; and macroeconomic and geopolitical conditions could deteriorate. Further information on potential factors that could affect Cadence's ability to successfully integrate the D&E business or otherwise realize the anticipated benefits of the acquisition is included in Cadence's most recent annual report on Form 10-K, its subsequent quarterly reports on Form 10-Q and its other filings with the Securities and Exchange Commission. The forward-looking statements included in this press release represent Cadence's views as of the date of this press release, and Cadence disclaims any obligation to update any of them publicly in light of new information or future events.

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