Recently, according to Reuters, Ralf Thomas, Chief Financial Officer of Siemens (SIEGn. DE), stated that Siemens may sell some of its shares in Siemens Healthineers (SHLG. DE), Siemens Energy (ENR1n. DE), and Fluence (FLNC. O) to help raise funds for its acquisition of Altair.

On October 30th, Siemens signed the final acquisition agreement with AI software leader Altair, with a transaction amount of up to 10.6 billion US dollars (approximately 75 billion yuan), setting a record for the largest merger and acquisition transaction in Siemens Group's history (excluding the merger of the spin off business Siemens Healthineers).

The combination of Altair's capabilities in simulation, high-performance computing, data science, and artificial intelligence with Siemens Xcelerator (industrial software) will create the world's most complete portfolio of artificial intelligence design and simulation products, "said Siemens President and CEO Boren

01. Siemens official response
Siemens, a century old manufacturing giant originating from Europe, was founded by the outstanding German inventor Werner von Siemens in 1847. After years of baptism, it has transformed into a comprehensive technology leader spanning across industries, infrastructure, transportation, and healthcare. As of September 30, 2023, Siemens has nearly 305000 global employees, demonstrating its strong global influence and profound industry heritage.

Siemens' acquisition target, Altair, as a leading software provider in the industrial simulation and analysis market, is rapidly rising to become an industry giant. In the fiscal year 2023, Altair's total revenue was $612.7 million, of which software product revenue was $549 million. Its stock price has risen by 76% in the past year, and its P/E ratio has reached 46 times.

Since its establishment in 1985, Altair has been committed to providing excellent simulation driven design, high-performance computing (HPC), and data analysis software and services. Its cutting-edge products and solutions are widely used in the automotive, aerospace, defense, energy, life sciences, electronics, and many manufacturing industries, demonstrating unparalleled technological strength and industry influence.

In China, Altair established a wholly-owned subsidiary, Altair Engineering Software (Shanghai) Co., Ltd., in 2001. It is reported that as of 2022, Altair has over 1500 customers in China.

Hu Quan, President of the Industry 4.0 Research Institute, pointed out that Altair has been committed to exploring the field of digital twins for the past five years and has released complete digital twin solutions. Although Siemens is also promoting the application of digital twins, it is not going smoothly. This acquisition will help Siemens subsidiary determine its position in the field of digital twins.

It is understood that Siemens has acquired Altair for 14 times the estimated sales revenue and 25 times the estimated operating profit by 2025. This price is 18.7% higher than Altair's closing price on October 21st.

On the second day of reaching the agreement, on October 31st, Ralf Thomas, the Chief Financial Officer of Siemens, announced that he would reduce his stake in the company to raise funds for the acquisition. Siemens currently holds a 75% stake in Siemens Healthineers, a 17% stake in Siemens Energy, and a 31% stake in energy storage company Fluence.

Siemens also completed the sale of its Innodynamics electric motor and drive business this month, receiving approximately 3.5 billion euros (3.81 billion US dollars) in funding.

For Siemens Healthineers, Thomas stated that selling around 5% of the shares would be a meaningful assumption. And it should be noted that the specific purpose of the proceeds from the sale of shares of the listed company is clearly related to this transaction. Thomas said that Siemens will seek to minimize the impact of the sale of shares on the stock prices of related companies, stating, "We will definitely protect the stock prices of affected companies

After Thomas spoke to the outside world, perhaps due to concerns about using inappropriate language to leave an impression of Siemens' tight finances, Cedric Neike, a senior executive of Siemens' management committee, quickly stepped forward the next day to convey firm confidence to the German media: "This is not our final work in the software field. Our financial strength is strong enough to support more transactions. The software business is the key engine driving our growth and profitability

02. Siemens' Transformation Path
In recent years, Siemens has focused more on core businesses such as factory automation and digital solutions through a series of splits and divestitures.

In 2016, Siemens Group spun off its healthcare business into an independent company and went public on the London Stock Exchange in 2018.

In May 2019, Siemens decided to divest its energy business and spin off its oil and gas, conventional power generation, transmission, and related services businesses, as well as its 59% stake in wind power company Siemens Gamesa, to establish Siemens Energy.

In 2023, Siemens plans to spin off its motor and large transmission equipment businesses and establish Innometrics.

In September 2024, it was announced that its electric vehicle charging division eMobility would be spun off. At the same time, it has successively acquired simulation software companies such as LMS, Mentor, StarCCM, etc., transforming its positioning from a hardware manufacturer to a software and service provider, achieving a transition from "hard" to "soft".

In the past three years, the global simulation analysis market has experienced significant growth, jumping from $7.47 billion in 2020 to $10.06 billion in 2023, with a staggering increase of 34.6%. For a technology field that has only undergone more than 60 years, it demonstrates its infinite potential.

Siemens emphasizes that by acquiring Altair, a leading company in modeling and simulation, high-performance computing, data science, and artificial intelligence, Siemens will have the most complete AI driven design and simulation portfolio, which is consistent with Siemens' strategy of combining the real world and digital space using hardware and software.

03. Siemens Healthineers Layout Digital Twins
Interestingly, Siemens Healthineers also has a presence in the field of digital twins. In the field of medicine, digital twin technology creates "digital twins" of patients, which reflect the individual's health status in real time and enable disease prediction and management.

In May of this year, at the opening ceremony of the 2024 Shanghai Information Consumption Festival, the Shanghai Municipal Commission of Economy and Information Technology and other departments jointly launched the centralized signing ceremony for the second batch of major metaverse application scenario demand "unveiling and leading" projects in Shanghai. Siemens Healthineers is the only two in this project, partnering with Ruijin Hospital affiliated with Shanghai Jiao Tong University School of Medicine and Shanghai Pulmonary Hospital to usher in a new era of metaverse healthcare.

Ruijin Hospital, as one of the medical scene builders of this project, has proposed a core medical application scenario for medical digital humans. This scenario aims to create an industry-leading metaverse intelligent virtual surgery system for clinical medical processes, especially surgery and critical cases. It supports multi scenario digital twin applications such as preoperative planning, intraoperative navigation, and postoperative review, and is expected to significantly reduce surgical risks, improve surgical success rates, and provide patients with safer and more efficient medical services.

As the only medical device leading unit shortlisted for this project, Siemens Healthineers and Ruijin Hospital affiliated with Shanghai Jiao Tong University School of Medicine have officially reached a cooperation intention to jointly build the "Medical Digital Human Metaverse Application Scenario" project.

It is reported that as the core support of the metaverse solution, Siemens Healthineers uses patient imaging examination data and metaverse technologies such as digital twin, 3D reconstruction, and AR to create virtual "digital organs" that highly simulate the shape, structure, and function of real organs, providing doctors with more intuitive and accurate diagnostic basis.
By utilizing the "digital organ" technology, Siemens Healthineers' metaverse teaching and research platform has successfully achieved patient imaging digital twins, imaging equipment digital twins, and expert digital avatars, establishing a metaverse medical industry university research ecosystem.

On the basis of this success, Siemens Healthineers' metaverse technology will be put into clinical application in visual surgery in 2023. So far, more than 25 clinical surgeries have been successfully performed in China, and its accuracy and safety have been widely recognized.

Source: http://qixieke.com/Font/index/detailPage.html?id=3243-19