Cadence to buy BETA CAE for $1.24 billion

Cadence Design Systems Inc (NASDAQ: CDNS) opened in the red on Tuesday after announcing plans of buying BETA CAE Systems International for $1.24 billion.

Why is Cadence buying BETA CAE?

The computational software company will pay 40% of the consideration in stock and the remaining in cash.

Cadence expects the BETA CAE acquisition to help boost growth at its intelligence system design business. Anirudh Devgan – chief executive of the Nasdaq-listed firm said in a press release today:

The news arrives less than a month after $CDNS reported its financial results for the fourth quarter that topped Street estimates. Cadence stock has gained more than 50% over the past twelve months.

BETA CAE acquisition to close in Q2

Cadence Design Systems will opt for new debt to fund the cash part of BETA CAE acquisition – and will use free cash flow to pay off that debt.

The multinational expects to close the announced transaction in the second quarter of 2024 provided that it meets the customary closing conditions including regulatory approvals.

BETA CAE will boost the company’s revenue by some $40 million this year and dilute its earnings on a per-share basis by 12 cents, as per the press release on Tuesday morning.

Wall Street currently has a consensus “buy” rating on $CDNS that does not pay a dividend yield at writing.