xagon AB has announced a definitive agreement to divest its Design & Engineering (D&E) business, including the former MSC Software, to Cadence Design Systems, Inc. in a landmark deal valued at approximately €2.7 billion. The transaction is a strategic move by Hexagon to sharpen its portfolio focus, streamline operations, and enhance financial flexibility.
Under the terms of the deal, Cadence will pay 70% of the consideration in cash and 30% in Cadence common stock issued to Hexagon.
Driving Portfolio Focus
“This sale marks a significant step in our long-term strategy to concentrate on the capture, measurement, and use of real-world data while creating stronger financial headroom,” said Ola Rollén, Chairman of the Board at Hexagon.
Rollén noted that while the D&E business has delivered strong results—especially since the 2017 acquisition of MSC Software and its successful transition to a subscription model—the engineering simulation market is increasingly dominated by electronic design automation (EDA) players. Partnering with Cadence, a recognized leader in EDA, ensures customers, employees, and shareholders benefit from stronger alignment with market trends.
Strategic Fit with Cadence
According to Anders Svensson, President and CEO of Hexagon, the transaction creates exciting growth opportunities:
“D&E’s advanced solutions are a natural fit with Cadence’s Multiphysics System Analysis business. This move allows us to simplify our portfolio while concentrating innovation and investment in areas with greater synergies—particularly across our sensor technologies and core software businesses.”
Financial Impact
In 2024, the D&E business contributed approximately €265 million in revenue to Hexagon’s Manufacturing division, performing above the group’s average profitability. Hexagon expects to record a gain from the sale, with full details to be disclosed in its Q3 2025 interim report.
The proceeds will be allocated toward general corporate purposes, including debt reduction and funding new acquisitions to accelerate long-term growth.
Looking Ahead
The transaction, subject to regulatory approvals and customary closing conditions, is expected to close in the first quarter of 2026. Alongside the potential separation of Octave—still slated for the first half of 2026—Hexagon will continue to strengthen its position in software and services, supported by synergies with its expanding portfolio of sensors and robotic solutions.
On a proforma basis (excluding D&E and Octave), software and services would account for more than 40% of Hexagon’s revenues, with recurring revenues above 25%.