Cadence to Acquire Hexagon’s Engineering Unit for $3.16Bn

Cadence Design Systems has made a decisive move to expand its reach in the engineering software sector by announcing the acquisition of Hexagon AB – Design & Engineering (D&E) business for approximately €2.7 billion ($3.16 billion). The D&E division, headquartered in Stockholm and formerly known as MSC Software, is recognized for its simulation and analysis software used in industries such as automotive and aerospace.

Deal Structure and Strategic Impact

Under the terms of the agreement, Cadence will fund 70% of the purchase using cash, while the remaining 30% will be settled by issuing Cadence stock to Hexagon AB.

This balanced payment structure aims to minimize dilution for Cadence’s shareholders, while ensuring Hexagon retains a strategic connection to the business. If the acquisition is not completed, Cadence will pay a reverse termination fee of up to €175 million.

The addition of the D&E division, which employs over 1,100 individuals and generated around $280 million in 2024 revenue, is set to bolster Cadence’s System Design & Analysis portfolio.

Key assets include flagship CAE tools like MSC Nastran and Adams, further solidifying Cadence’s role in multidisciplinary engineering simulation and supporting broader initiatives in automotive, aerospace, and physical AI-based system design.

Analysts see this move as part of Cadence’s strategy to offer an end-to-end platform that extends from semiconductor design to full system simulation, addressing the rising demand for AI-driven system development.

Leadership Comments

Ola Rollén, Chairman of the Board for Hexagon AB, commented on the strategic rationale behind the divestiture:
“Today’s announcement is a step in our plan to streamline Hexagon’s portfolio and focus on the capture, measurement, and use of real-world data, while also strengthening our financial flexibility. Our D&E business is a leading provider of mission critical CAE software solutions and has delivered strong results since we acquired MSC in 2017. By transitioning D&E to Cadence, a global leader in this field, and establishing a long-term collaboration between our companies, we are creating a stronger future for our customers, employees, and shareholders.”

Closing Timeline and Regulatory

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

Proceeds from the transaction will be used by Hexagon for general corporate purposes, including strengthening its balance sheet and potential future investments.

Cadence’s acquisition of Hexagon’s D&E business marks a watershed moment in the engineering design automation landscape, signaling the growing convergence of simulation, AI, and system-level design as the industry’s next battleground.