Latham & Watkins and Jones Day Advise on $3.15 Billion Cadence-Hexagon Deal

Date: September 4, 2025

In a significant move set to reshape the engineering, design, and simulation technology landscape, Cadence Design Systems Inc. has announced plans to acquire the design and engineering software business of Swedish giant Hexagon AB for approximately €2.7 billion (about $3.15 billion). The long-anticipated deal, with Latham & Watkins LLP advising Cadence and Jones Day representing Hexagon, highlights both the consolidation trend in the global software sector and the strategic importance of advanced digital engineering solutions.

Deal Overview and Strategic Rationale

According to a joint statement issued by the companies on September 4, 2025, the transaction—a mix of cash and equity—will deliver immediate value to Hexagon’s shareholders and is expected to close in the first half of 2026, pending regulatory approvals and customary closing conditions. The business unit to be acquired specializes in computer-aided engineering (CAE) and design simulation tools, widely used by automotive, aerospace, manufacturing, and electronics sectors.

Cadence, a leader in electronic design automation (EDA) and computational technologies, is set to significantly broaden its offerings by integrating Hexagon’s engineering simulation, computational fluid dynamics (CFD), and finite element analysis (FEA) platforms. The combination is expected to:

• Enhance Cadence’s position in industrial engineering markets outside its traditional electronic design base,
• Accelerate R&D and product integration in simulation-driven science,
• Capitalize on robust market demand for digital twins, model-based system engineering, and predictive maintenance solutions across sectors.

Industry and Market Impact

The engineering simulation market has seen explosive growth in recent years, projected to surpass $12 billion by 2027, according to Fortune Business Insights. Cadence’s acquisition targets high-value industrial software portfolios in areas such as mechanical, structural, thermal, and electromagnetic analysis—capabilities key to automation, electrification, sustainability, and autonomous systems development.

Hexagon’s design and engineering segment, with a global presence and more than 3,000 employees, posted revenues exceeding $800 million in 2024. By joining forces, Cadence expects to boost annual revenue by over 15% and strengthen its international footprint, notably in Europe and Asia, while gaining access to Hexagon’s blue-chip customer base, which includes Siemens, Airbus, and General Motors.

Legal Advisors and Deal Structure

Latham & Watkins LLP served as lead counsel to Cadence, leveraging its experience in cross-border M&A and technology acquisitions. Cadence’s in-house counsel team worked closely with Latham’s technology transactions group. Jones Day provided counsel to Hexagon, advising on deal execution, regulatory strategy, and the carve-out of the targeted business segment.

The transaction involves a combination of $1.85 billion in cash and approximately $1.3 billion in Cadence equity, reflecting ongoing confidence in Cadence’s growth strategy. Financing will be supported by Cadence’s robust balance sheet and a new syndicated credit facility underwritten by leading international banks.

Executive Comments

Cadence CEO Anirudh Devgan stated, “Bringing Hexagon’s world-class engineering simulation tools under the Cadence umbrella enables us to provide end-to-end intelligent system design. This move responds to our customers’ needs for seamless electronics-mechanical integration and advances our vision for computational software leadership.”

Hexagon CEO Ola Rollén commented, “This transaction unlocks significant value, allowing us to refocus on our core digital reality and autonomous solutions businesses. We are confident that Cadence will be an excellent steward for our talented colleagues and customers in the design simulation space.”

Regulatory and Antitrust Considerations

Given the size and international scope of both companies, the transaction will be subject to approvals from competition authorities in the European Union, United States, and several key Asian jurisdictions. Recent heightened antitrust scrutiny may impact the closing timeline, as regulators are increasingly attentive to consolidation in the critical digital engineering and automation software domains. Both firms have expressed confidence that the deal will clear regulatory hurdles as structured.

Market Reception and Shareholder Response

Following the announcement, shares of Cadence (NASDAQ: CDNS) rose nearly 4% in after-hours trading, reflecting investor optimism around expanded market opportunities and anticipated synergies. Hexagon’s Stockholm-listed stock (HEXAB) also saw modest gains on news of the value-enhancing exit.

Industry analysts note that this consolidation will likely spur further dealmaking activity in the engineering and design software sector, where players such as ANSYS, Dassault Systèmes, and Siemens Digital Industries continue to seek growth via both internal development and M&A.

Conclusion and Next Steps

The Cadence-Hexagon deal, one of the largest software sector acquisitions of 2025, underscores the increasing convergence of electronics and mechanical design in a rapidly digitalizing world. By acquiring Hexagon’s design and engineering business, Cadence is positioning itself as a comprehensive provider of computational solutions for next-generation product innovation, smart manufacturing, and sustainability initiatives.

Both companies have committed to maintaining business continuity for existing customers and partners throughout the transition. Integration planning is already underway, and parties expect to finalize the transaction upon receipt of regulatory approvals in 2026.

This transformational acquisition is widely seen as a bellwether for ongoing consolidation and technological advancement in the global engineering and design ecosystems.