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Siemens To Expand With Acquisition Of Mentor Graphics

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Siemens and Mentor Graphics have announced that they have entered into a merger agreement under which Siemens will acquire Mentor for $37.25 per share in cash, which represents an enterprise value of $4.5 billion. The offer price represents a 21 percent premium to Mentor's closing price on November 11, 2016, the last trading day prior to the announcement. Mentor's Board of Directors approved and declared advisable the merger agreement, and Mentor's Board of Directors recommends the approval and adoption of the merger agreement by the holders of shares of Mentor common stock. Mentor shareholder Elliott Management has committed to support the transaction.

This acquisition extends Siemens' Digital Enterprise Software portfolio with Mentor's established electronics IC and systems design, simulation and manufacturing solutions.

"Siemens is acquiring Mentor as part of its Vision 2020 concept to be the Benchmark for the New Industrial Age. It's a perfect portfolio fit to further expand our digital leadership and set the pace in the industry," said Joe Kaeser, President and CEO of Siemens AG.

"With Mentor, we're acquiring an established technology leader with a talented employee base that will allow us to supplement our world-class industrial software portfolio. It will complement our strong offering in mechanics and software with design, test and simulation of electrical and electronic systems," said Klaus Helmrich, member of the Managing Board of Siemens.

Mentor is headquartered in Wilsonville, Oregon, U.S., and has employees in 32 countries worldwide. In its fiscal year ended January 31, 2016, Mentor had over 5,700 employees and generated revenue of approximately $1.2 billion with an adjusted operating margin of 20.2 percent.

"Combining Mentor's technology leadership and deep customer relationships with Siemens' global scale and resources will better enable us to serve the growing needs of our customers, and unlock additional significant opportunities for our employees," said Walden C. Rhines, chairman and CEO of Mentor. "Siemens is an ideal partner with financial depth and stability, and their resources and additional investment will allow us to innovate even faster and accelerate our vision of creating top-to-bottom automated design solutions for electronic systems. We are excited to join the Siemens family, as it is clear they share the same values and focus on customer success, and are pleased that this transaction provides immediate and certain value to our stockholders."

Siemens expects to achieve synergies through a combination of revenue growth and anticipated margin expansion, with a total EBIT impact of over €100 million within 4 years from closing the transaction. Additionally, the transaction is expected to be EPS accretive within three years from closing. Closing of the transaction is subject to customary closing conditions and is expected in Q2 of calendar 2017. Mentor will be part of the PLM software business of Siemens' DF Division. DF is the industry leader in automation technology and a leading provider of PLM software.

"By adding Mentor's electronic design automation solutions and talented experts to our team, we're greatly enhancing our core competencies for product design that creates a very precise digital twin of any smart product and production line," noted Helmrich.

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