CIMdata PLM Industry Summary Online Archive
17 May 2005
Acquisitions
Dassault Systèmes (DS) to Acquire ABAQUS Inc. to Create Next-Generation Solutions for 3D Realistic Simulation
Dassault Systèmes announced an agreement to acquire ABAQUS Inc. in an all-cash transaction approximating $413 million, subject to certain adjustments at closing. ABAQUS is the established leader in nonlinear finite element analysis software. DS expects the planned acquisition to be immediately accretive to net income, excluding acquisition costs and the impact of deferred revenue accounting treatment. DS is also unveiling SIMULIA, a scientific, open platform that will enable the integration of all types of simulation applications.
ABAQUS and DS will make realistic simulation accessible to a wider audience and greatly increase ease of use. With this initiative, DS will also diversify into markets beyond its existing manufacturing base. The ABAQUS purchase is a significant step to reshape the large but currently fragmented simulation software market, in which most companies still use niche applications rather than unified solutions. According to industry analysts, the simulation software market is estimated at $2.35 billion today and is expected to grow to $4 billion in the next five years, with average growth of 12 percent per year. Many applications currently in use are internally developed programs, and current market figures do not take those applications into account.
ABAQUS is well recognized for its best-in-class technology, which companies are increasingly seeking, that is capable of scaling from simple to the most demanding simulations. For example, a simple drop-test simulation enables users to observe the behavior of all of the internal components of a mobile phone. DS will also benefit from ABAQUS's intellectual capital, embodied by its technology team including 70 PhDs.
"With the best teams, we can transform the industry," said Bernard Charlès, president and CEO, Dassault Systèmes. "We warmly welcome the impressive ABAQUS team. Together, we will enable our customers to experience virtually what their customers will experience using their products in the real world."
"I am delighted and enthused that Dassault Systèmes has selected ABAQUS as the foundation of its strategic investment in simulation technology," said Mark Goldstein, president and CEO, ABAQUS Inc. "As companies continue to adopt performance-centric practices as a fundamental component of product design, the role of simulation will become ever more important to the success of an enterprise. I look forward to the contribution that ABAQUS technologies will bring to Dassault Systèmes' PLM solutions while at the same time maintaining our focus on delivering industry-leading advanced finite-element solutions to the PLM market in general."
"With total revenues approaching the $100 million threshold on an annual basis, ABAQUS has both a high level of both software and recurring software revenue," said Thibault de Tersant, executive vice president and CFO, Dassault Systèmes. "Moreover, ABAQUS has a strong level of profitability, which should enable the acquisition to be immediately accretive to earnings excluding acquisition costs and the impact of deferred revenue accounting treatment."
Dassault Systèmes estimates that the impact of deferred revenue write-down, as part of purchase accounting adjustments, may result in a loss of revenue of approximately $20 million within twelve months of the completion of the proposed acquisition of ABAQUS.
The transaction is subject to the satisfaction of certain customary conditions and approval by certain regulatory authorities. Neither Dassault Systèmes nor ABAQUS will require a shareholder vote. Dassault Systèmes expects that the proposed acquisition could be completed by the end of its third fiscal quarter.
SIMULIA will be the new unified, open platform supporting all simulation domains. It will accelerate innovation by supporting the capture and deployment of best practices for predicting product behavior, as well as reduce the cost of ownership for scientific applications. SIMULIA will also give users access to simulation capabilities without requiring the steep learning curve of disparate, traditional simulation tools.
SIMULIA will have the largest open ecosystem available in the simulation market by including the DS Component Application Architecture V5 (CAA V5) ecosystem and existing ABAQUS partners.
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