BETA CAE’s world-renowned solutions will complement and expand Cadence’s system analysis portfolio for automotive, aerospace, industrial and healthcare verticals

Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced it has entered into a definitive agreement to acquire BETA CAE Systems International AG, a leading system analysis platform provider of multi-domain, engineering simulation solutions. The addition of BETA CAE’s proven technologies and talent will accelerate Cadence’s Intelligent System Design^™ strategy by expanding its multiphysics system analysis portfolio and enabling entry into the structural analysis segment, unlocking a multi-billion-dollar incremental TAM opportunity. Under the terms of the definitive agreement, Cadence will pay approximately $1.24 billion for the transaction, with 60 percent of the consideration to be paid in cash and 40 percent to be paid through the issuance of Cadence common stock to current BETA CAE shareholders. In conjunction with the transaction, Cadence expects to obtain new debt financing to fund a portion of the cash component of the purchase price. Cadence plans to use free cash flow generated by its existing operations to rapidly pay down debt incurred to fund the transaction, while also maintaining share repurchases.

Increasing system complexity and time-to-market pressures from accelerating mechanical and electrical hyperconvergence, along with the digital transformation in multiple industries, are driving the need for multiphysics simulations early in the design cycle. Over the past few years, Cadence has expanded its system analysis portfolio to build out a comprehensive multiphysics platform including electromagnetics (EM), electrothermal (ET) and computational fluid dynamics (CFD) solutions, and with BETA CAE, Cadence will enter structural analysis, the largest system analysis segment.

BETA CAE is a highly respected industry leader, well-known for its groundbreaking, innovative, high-performance simulation software and best-in-class services. BETA CAE’s portfolio includes its flagship pre- and post-processing products, which are the industry gold standard, mechanical and structural simulation and multiphysics analysis, and simulation, process, data, and resources management (SPDRM) solutions, among others. BETA CAE has a very strong footprint in the automotive vertical sector, delivering solutions to the top 10 global automobile manufacturers and most Formula One racing teams, as well as leading customers in the aerospace, industrial and healthcare industries. BETA CAE customers include marquee names such as Honda Motor Company Ltd., General Motors Company, Stellantis, Renault Group, Volvo Cars and Lockheed Martin Corporation, among others.

“Cadence entered the multiphysics space several years ago through organic innovation and acquisitions. This strategic acquisition reaffirms our commitment to continued growth in this critical domain,” said Dr. Anirudh Devgan, president and CEO, Cadence. “Combining our computational software expertise with BETA CAE’s rich technology and talent will enable us to offer a more comprehensive portfolio to customers, while opening significant new opportunities for Cadence by tapping into the structural analysis segment. These solutions are particularly important in automotive, where convergence of electrical and mechanical designs is further driven by an increasing shift towards electric vehicles, requiring deeper design team collaboration in integrated workflows.”

“For more than two decades we’ve led the evolution of engineering simulation, first by establishing our reputation in the land mobility sector, and then successfully expanding to broad deployments across aerospace, defense, biomechanics, electronics, energy and other industries,” said Panagiotis Kouvrakis, chairman of BETA CAE. “We are very excited to join the Cadence team and are looking forward to advancing success through our shared values and passion for innovation and engineering, and our unwavering commitment to customers and partners.”

BETA CAE provides a complete platform that accommodates the entire simulation and analysis flow for multiphysics system simulations, spanning mechanical/structural, CFD and EM. Its flagship products include ANSA, an advanced, multidisciplinary computer-aided engineering (CAE) pre-processor that encompasses all necessary functionality for full-model build up in a single, cohesive, integrated environment, and META, an advanced, multidisciplinary CAE post-processor for optimally visualizing data and simulation results and creating reports, powered with state-of-the-art augmented reality capabilities. Additionally, BETA CAE’s EPILYSIS and FATIQ solvers enable customers to efficiently solve structural analysis and optimization problems. The SPDRM tool addresses the integrated orchestration of data, processes and resources by providing a simple and intuitive way to capture, deploy, manage and improve CAE processes. BETA CAE’s products are very complementary to Cadence’s multiphysics system analysis portfolio, which includes Clarity^™, Celsius^™, Sigrity^™, Voltus^™, Fidelity^™ and the recently announced Millennium^™ M1 multiphysics platform, addressing the EM, thermal, signal and power integrity, and CFD domains.

Headquartered in Lucerne, Switzerland, BETA CAE has a primary R&D center in Thessaloniki, Greece and 13 additional offices worldwide.

The acquisition is expected to close in the second quarter of 2024, subject to receipt of regulatory approvals and other customary closing conditions. BETA CAE has annual revenue of about $90 million, and Cadence expects BETA CAE to contribute approximately $40 million to 2024 revenue. Cadence expects the transaction to be approximately 12 cents dilutive to its 2024 earnings per share and to become accretive in 2025 (in each case, on a non-GAAP basis), based on Cadence’s debt repayment and share repurchase plans.

About Cadence

Cadence is a pivotal leader in electronic systems design, building upon more than 35 years of computational software expertise. The company applies its underlying Intelligent System Design^™ strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence^® customers are the world’s most innovative companies, delivering extraordinary products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For nine years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. 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 Cadence’s proposed acquisition of BETA CAE, the anticipated timeline and closing of the proposed transaction, the anticipated financing for the transaction, BETA CAE’s and Cadence’s talent, technologies and product offerings, business strategy, plans and opportunities, industry and market trends including TAM estimates, the expected benefits and impact of the proposed transaction and combined business on Cadence’s growth in the multiphysics space, BETA CAE’s annual revenue and Cadence’s financial outlook, including expected revenue contribution and earnings impact, and Cadence’s debt repayment and share repurchase plans. 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” 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 BETA CAE’s 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; risks associated with tax liabilities or changes in applicable tax laws or interpretations to which the proposed transaction or parties thereto are subject; BETA CAE or Cadence may fail to satisfy the closing conditions, including obtaining required regulatory approvals, in a timely manner or at all; uncertainties as to the availability of financing for the proposed transaction upon acceptable terms on a timely basis and associated costs and expenses, including applicable interest rates; uncertainty as to the amount of shares to be issued by Cadence to acquire BETA CAE due to fluctuations in the trading prices of Cadence’s common stock; Cadence may fail to successfully acquire and integrate BETA CAE; 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 BETA CAE; Cadence may not repay debt or maintain share repurchases as anticipated, including as a result of insufficient free cash flow or use of cash for other purposes; 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 or government regulations 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 BETA CAE or otherwise realize the anticipated benefits of the proposed acquisition is included in Cadence’s most recent report on Form 10-K 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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