Keysight Technologies is set to acquire ESI Group, a provider of virtual prototyping software solutions in automotive and aerospace end markets, for €913 million in cash.
ESI Group has reported $140 million in annual revenue. ESI Group provides ~$120 million of software revenue, bringing pro forma Keysight software revenue to ~$1.3 billion and ~23 percent of total revenue. ESI Group adds ~$110 million of annual recurring revenue (ARR). ESI Group will be accretive to margins with gross margins of >80 percent and additional cost synergies.
Some of the main customers of ESI Group include Daimler, Honda, Toyota, Hyundai, Ford, Boeing, Volvo, Siemens, Samsung, ABB, among others.
ESI Group’s software solutions simulate a product’s behavior during testing and real-life use. ESI Group’s real-time digital twin solutions combine model-driven simulation with data-driven test to create virtual simulations, and its immersive industrial solutions enable workflow automation and virtual manufacturing.
By bringing ESI Group into its electronic design and test portfolio, Keysight will expand its software prototyping capabilities into computer-aided engineering, enabling customers to accelerate time to market and lower operational costs, while reducing their environmental footprint.
“Keysight’s acquisition of ESI Group accelerates our strategy of providing software-centric solutions with virtual prototyping and advanced simulation capabilities,” Satish Dhanasekaran, President and Chief Executive Officer of Keysight, said.
Completion of the acquisition of the controlling block of ESI shares is expected to take place during the fourth quarter of calendar year 2023, with the tender offer to occur shortly thereafter.
