Siemens to Acquire CD-adapco: Pool of Key Players Keeps Shrinking as Consolidation Continues

Siemens PLM Software gets ready to acquire CD-adapco, makers of STAR-CCM+ simulation software (shown here).

The design software market is driven by a handful of key players. “A handful” is more literal than metaphorical here, since it revolves around the products and installed bases of about five or six big names. The same goes for the simulation software market. Smaller, newer players come and go, but the field is dominated by about five or six established brands that set the tone, policies, protocols, and prices. This morning, two such big names—one from design, another from simulation—decided to become one.

German manufacturing giant Siemens has just declared its plan to buy simulation software vendor CD-adapco for $970 million.

Anton Huber, CEO of Siemens PLM Software’s digital factory division, clarified, “CD-adapco will be integrated into the PLM software business of Siemens’ Digital Factory (DF) Division ... By adding advanced engineering simulation tools such as CFD to our portfolio and experienced experts in the field to our organization, we’re greatly enhancing our core competencies for model-based simulation that creates a very precise digital twin of the product.”

Klaus Helmrich, a member of Siemens’ managing board, said, “Simulation software is key to enabling customers to bring better products to the market faster and at less cost. With CD-adapco, we’re acquiring an established technology leader that will allow us to supplement our world-class industry software portfolio and deliver on our strategy to further expand our digital enterprise portfolio.”

Headquartered in Melville, New York, CD-adapco offers STAR-CCM+ simulation software. Its products address the fluid dynamics (CFD), solid mechanics, heat transfer, particle dynamics, reactant flow, electrochemistry, acoustics, and rheology disciplines.

Last September, CD-adapco suffered the loss of its cofounder and CEO Steve MacDonald, who led the company for the past 35 years. The company is currently overseen by interim president and CEO Sharron MacDonald.

Elizabeth Arndt from CD-adapco’s marketing said, “It was a strong criteria of Sharron MacDonald and the company founders, including Steve MacDonald, to find a company that would not only provide a platform to grow our technology for our customers, but also embrace the value and the passion of our people that have distinguished CD-adapco for 35+ years. Siemens will keep existing managers and employees in the company. No layoffs are planned as a result of the acquisition.”

CD-adapco has 3,200 customers worldwide and its software is currently used by 14 of the 15 largest automakers. Its focus on automotive manufacturing is in alignment with Siemens’ established position in automotive and transportation. Siemens’ press office clarified, “With the closing of the transaction, all existing CD-adapco customer contracts will be transferred over to Siemens.”

Arndt added, “Customers can expect a closer integration of CD-adapco’s engineering simulation solutions and Siemens powerful software systems. For example: Customers will obtain CD-adapco solutions—including all of its comprehensive consulting and other services—as an integral part of the Siemens portfolio. By integration into the global Siemens development network, the huge innovative power of CD-adapco will gain further momentum. Features and application options can thus be implemented even faster and adapted to the requirements of our customers.”

Siemens PLM Software’s NX suite includes robust simulation tools. NX CAE (Computer-Aided Engineering) in particular offers structural, thermal, flow, and multiphysics simulation, among others. Siemens PLM Software’s technology partners include ANSYS, a competitor to CD-adapco in the simulation market. Similarly, CD-adapco has a partnership with Dassault Systemes, a rival to Siemens PLM Software. Siemens’ pending acquisition of CD-adapco will most likely prompt restructuring of these partnerships to avoid conflicts.

Mark Hindsbo, VP of marketing for ANSYS, said, “Today’s announcement validates ANSYS’s vision for complete virtual prototype and simulation driven product development as critical for organizations creating the products of tomorrow. We have been investing in this mission for decades and welcome Siemens to this underpinning of Industry 4.0.”

As a market that caters to manufacturers who test and validate their designs’ performance using digital prototypes, the simulation software industry can be considered an adjunct to the CAD and PLM market. Therefore, successful simulation software vendors are acquisition targets for CAD and PLM market leaders seeking to expand their reach.

Dassault Systemes acquired simulation software developer SRAC in 2001. As a result, SRAC’s COSMOS simulation product became part of Dassault Systemes SolidWorks CAD program. In 2005, Dassault Systemes acquired ABAQUS Inc., a simulation software developer with a workforce that included 70 PhDs. The transaction spawned Dassault Systemes’ SIMULIA brand. In 2011, Siemens PLM Software acquired VISTAGY, a simulation software developer that specializes in composite materials. Over the years Autodesk bolstered its simulation portfolio with the acquisitions of PlassoTech, Moldflow, ALGOR, and Blue Ridge Numerics.

Siemens PLM Software—the division primarily responsible for Siemens NX and Teamcenter—is itself a result of Siemens’ acquisition of UGS, a company with a history in virtual prototyping technologies. The acquisition of LMS in 2012 gives Siemens a new batch of products to test and validate designs.

According to Siemens’ press office, “The planned acquisition of CD-adapco in 2016 will enable Siemens to simulate and test the flow, velocity, pressure distribution and heat distribution of fluids. It will also enable Siemens to answer questions like these: How does air flow around high-speed trains? How much heat is generated? How must the design of CAD systems be changed to optimize aerodynamics? This step will enable Siemens to create a comprehensive portfolio of industry software for the design, simulation and testing of products and to participate in a rapidly growing market with an average annual growth rate of approximately 8%.”