Cadence to Acquire Hexagon's Design & Engineering Business, Accelerating Expansion in Physical AI and System Design and Analysis

World-renowned solutions will complement Cadence's system analysis portfolio for automotive, aerospace, industrial and robotics

Cadence (NASDAQ:CDNS) today announced it has entered into a definitive agreement to acquire the Design & Engineering ("D&E") business of Hexagon AB, which includes its MSC Software business—a pioneer in engineering simulation and analysis solutions. This acquisition accelerates Cadence's Intelligent System Design™ strategy, significantly expanding the Cadence® System Design & Analysis portfolio and reinforcing its commitment to delivering comprehensive solutions for the world's most demanding design challenges. The addition of Hexagon's proven D&E technology and talent will build upon Cadence's 2024 Beta CAE acquisition, enabling a meaningfully deeper presence in the multi-billion-dollar structural analysis market.

Under the terms of the agreement, Cadence will pay approximately €2.7 billion for the business, with 70% of the consideration to be paid in cash and 30% to be paid through the issuance of Cadence common stock to Hexagon.

Accelerating electrical-mechanical hyperconvergence is driving the strong need for more multiphysics simulations earlier in the design cycle. Leveraging its computational software expertise, Cadence has steadily built out a compelling system analysis portfolio spanning electromagnetics, electrothermal and CFD, and established a foundational position in structural analysis with Beta CAE. With customers increasingly seeking seamless engineering workflows, adding Hexagon D&E's renowned mechanical solvers will equip Cadence to deliver a comprehensive, unified, end-to-end multiphysics platform.

Hexagon's D&E business is renowned for its flagship products, MSC Nastran and Adams, which are widely recognized as industry standards in structural and multibody dynamics simulation. These technologies are integral to the design and validation of complex mechanical systems, particularly in the aerospace and automotive sectors, where performance, precision and reliability are paramount. Additionally, Adams' multibody dynamics capabilities are poised to play a critical role in the exciting and emerging fields of robotics and physical AI, where accurate simulation of real-world motion and interactions is essential. The acquisition will also bring an impressive portfolio of highly complementary solutions in multiphysics analysis, system dynamics, metal forming and autonomous driving simulation.

"Cadence has long been at the forefront of innovation in computational software for semiconductors and electronic systems," said Anirudh Devgan, Cadence's president and chief executive officer. "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. This will be a pivotal step in enabling our customers to design the complex, converged systems of tomorrow."

The acquisition will allow Cadence to serve a broader customer base, including leading aerospace and automotive OEMs and Tier 1 suppliers such as Volkswagen Group, BMW, Toyota, Lockheed Martin, BAE and Boeing, among others, who use Hexagon's D&E solutions for mission-critical simulation workflows. These solutions are essential for optimizing structural integrity, vehicle dynamics and system reliability, especially as industries transition toward electric vehicles, autonomous systems and advanced materials.

The incoming business generated approximately $280 million in revenue in 2024, with over 1,100 employees across multiple global sites. It has world-class R&D, sales and support teams with deep domain expertise and strong ecosystem partnerships.

The transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and customary closing conditions.

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.

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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 Cadence's proposed acquisition of the D&E business from Hexagon, the anticipated timeline and closing of the proposed transaction, talent, technologies, and product offerings, business strategy, plans, and opportunities, industry and market trends including market estimates, and the expected benefits and impact of the proposed transaction on Cadence's business. 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 D&E 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; Hexagon or Cadence may fail to satisfy the closing conditions, including obtaining required regulatory approvals, in a timely manner or at all; Cadence may fail to integrate the D&E business; Cadence may fail to realize the anticipated benefits of the proposed acquisition; Cadence may incur unanticipated costs or other liabilities in connection with acquiring or integrating the D&E business; the potential impact of the announcement or consummation of the proposed acquisition on relationships with third parties, including employees, customers, partners, and competitors; 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 the closing of the proposed transaction or post-closing operations and results of operations; and macroeconomic and geopolitical conditions could deteriorate. Further information on potential factors that could affect Cadence's ability to successfully acquire and integrate the D&E business or otherwise realize the anticipated benefits of the proposed 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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