Cadence Design to buy Hexagon's design and engineering unit for $3.16 billion

Sept 4 (Reuters) - Cadence Design CDNS.O said on Thursday it will buy the design and engineering business of Stockholm-based Hexagon AB HEXAb.ST for 2.7 billion euros ($3.16 billion), to expand its customer base and scale up its product portfolio.

The U.S. chip design software provider will pay 70% of the amount in cash and the rest by issuing shares to Hexagon.

Cadence, whose customers include major chipmakers such as Nvidia NVDA.O and Qualcomm QCOM.O, is known for its electronic computer-aided design software, which are key to designing chips and verifying that they are bug-free.

Hexagon's D&E business is a computer-aided engineering software solutions provider with market-leading products in the area of structural and multibody dynamics simulation.

Its revenue in 2024 was nearly 265 million euros and it has more than 1,100 employees globally.

The deal will give Cadence a broader customer base, including aerospace and automotive original equipment manufacturers and suppliers such as Volkswagen Group VOWG.DE, BMW BMWG.DE, Lockheed Martin LMT.N, which currently use Hexagon's D&E solutions.

The transaction is expected to close in the first quarter of 2026. Cadence will have to pay a reverse termination fee of up to 175 million euros, if the deal does not go through.

The latest purchase builds on Cadence's 2024 acquisition of BETA CAE Systems, which made software for analyzing car and jet engine designs, for $1.24 billion in cash and stock.

($1 = 0.8542 euros)