Cadence Design Systems, a leading U.S.-based chip design software provider, announced on Thursday that it has reached an agreement to acquire the design and engineering (D&E) business of Stockholm-based Hexagon AB for approximately 2.7 billion euros, equivalent to $3.16 billion. The acquisition is aimed at expanding Cadence’s customer base and scaling up its portfolio of software products for engineering and design applications across multiple industries.
Under the terms of the deal, Cadence will pay 70% of the transaction value in cash, with the remaining 30% settled through the issuance of Cadence shares to Hexagon. This combination of cash and equity underscores Cadence’s commitment to creating a strategic partnership while maintaining flexibility in its financing approach.
Cadence, which counts major chipmakers such as Nvidia and Qualcomm among its customers, is best known for its electronic computer-aided design (ECAD) software. Its solutions play a critical role in the semiconductor industry, enabling chip designers to create and verify integrated circuits and system-on-chip (SoC) designs while ensuring performance and reliability. The company has been steadily expanding its footprint in adjacent software segments, particularly in areas involving simulation, verification, and design automation, to provide a comprehensive suite of tools for modern electronics development.
Hexagon’s D&E unit is a leading provider of computer-aided engineering (CAE) software, specializing in structural and multibody dynamics simulation. Its products are widely recognized for their capabilities in modeling complex mechanical systems and analyzing their performance under various conditions. In 2024, Hexagon’s D&E business reported revenue of nearly 265 million euros and employed more than 1,100 professionals across its global operations. By integrating Hexagon’s software into its own ecosystem, Cadence expects to accelerate growth into markets beyond semiconductors, particularly in aerospace, automotive, and industrial engineering sectors.
The acquisition will provide Cadence with direct access to Hexagon’s diverse customer base, which includes major original equipment manufacturers (OEMs) and suppliers such as Volkswagen Group, BMW, and Lockheed Martin. These companies rely on Hexagon’s solutions for the simulation and validation of complex engineering projects, including automotive structures, aerospace systems, and industrial machinery. By combining Cadence’s design and verification expertise with Hexagon’s advanced simulation capabilities, the company anticipates delivering a more integrated, end-to-end software platform for engineering and design teams worldwide.
The transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and customary closing conditions. As part of the agreement, Cadence has agreed to a reverse termination fee of up to 175 million euros in the event the deal does not close, providing a measure of financial protection for Hexagon.
This latest acquisition follows Cadence’s 2024 purchase of BETA CAE Systems, a company specializing in software for analyzing automotive and jet engine designs, for $1.24 billion in cash and stock. That deal marked Cadence’s initial foray into the broader CAE market and demonstrated its strategy of expanding beyond traditional semiconductor design software into adjacent engineering and simulation spaces. The Hexagon acquisition builds on this strategy, positioning Cadence to compete more effectively across multiple industries while offering a comprehensive suite of software solutions spanning both electronic and mechanical design.
The move also highlights the growing importance of integrated software platforms that can handle the increasingly complex demands of modern engineering. By combining semiconductor design expertise with advanced mechanical simulation tools, Cadence aims to provide customers with a seamless experience that reduces development cycles, improves design accuracy, and enhances overall product innovation.
Analysts view the acquisition as a significant step for Cadence in its quest to become a global leader not only in chip design but also in high-performance engineering software. The combined capabilities of Cadence and Hexagon’s D&E unit are expected to create cross-selling opportunities, increase recurring software revenues, and strengthen the company’s position in industries where simulation and verification are mission-critical.
With this acquisition, Cadence is signaling its commitment to long-term growth and diversification, leveraging its expertise in semiconductor design to expand into adjacent engineering domains. As the company integrates Hexagon’s operations over the coming months, industry watchers will be closely monitoring how effectively Cadence can unify the two software platforms and translate the combined technologies into tangible value for its growing customer base.
Exchange rate reference: $1 = 0.8542 euros.
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