New Delhi, India — Cadence Design Systems has announced a $3.16 billion agreement to acquire the design and engineering (D&E) division of Sweden’s Hexagon AB. The acquisition, valued at €2.7 billion, represents one of the most significant deals in Cadence’s history and is scheduled to close in the first quarter of 2026.
The move signals Cadence’s strategic expansion beyond its core strength in chip design. Headquartered in San Jose, California, the company provides electronic design automation (EDA) software widely used by major semiconductor firms like Qualcomm and Nvidia. However, this acquisition will push Cadence deeper into the broader computer-aided engineering (CAE) market.
According to the agreement, Cadence will pay 70 percent of the total amount in cash. It will issue new shares to cover the remaining 30 percent. If the transaction fails to go through, Cadence has committed to a reverse termination fee of up to €175 million.
Hexagon’s D&E division focuses on simulation software for mechanical systems. Its tools play a critical role in structural analysis, multibody dynamics, and durability testing. These capabilities support the design of vehicles, aircraft, and complex industrial machinery. In 2024, the division earned nearly €265 million in revenue. It currently employs more than 1,100 professionals worldwide.
With this acquisition, Cadence will gain access to a new set of clients in various industries. Companies such as BMW, Volkswagen, and Lockheed Martin rely on Hexagon’s simulation tools to optimize product design and improve performance. As a result, Cadence will now offer a wider and more integrated set of solutions that span both electronic and mechanical design domains.
“This acquisition is a strategic leap forward,” said Cadence CEO Anirudh Devgan in a statement. “It allows us to serve a broader range of industries and deliver more integrated solutions that combine electronics and mechanical systems.”
This deal follows Cadence’s earlier acquisition of BETA CAE Systems in 2024, valued at $1.24 billion. That purchase added advanced tools for simulating automotive and aerospace systems, including engines and structures. Together, these acquisitions reflect Cadence’s plan to move beyond EDA and become a leader in digital engineering.
Industry observers have responded positively to the deal. As the complexity of modern products continues to grow, companies are relying more heavily on digital simulation tools. These tools help reduce development time, cut costs, and minimize the need for physical prototypes. This trend is especially prominent in the automotive and aerospace sectors, where safety and performance standards remain high.
“Cadence is clearly trying to diversify its portfolio and prepare for the future,” noted one industry analyst. “By integrating its chip design tools with Hexagon’s mechanical simulation capabilities, it can offer complete design solutions that are difficult to match.”
While Cadence strengthens its engineering portfolio, Hexagon will shift focus toward its core areas of digital reality and autonomous technologies. The company plans to reinvest the proceeds from the sale into growth and innovation in those sectors. This divestiture aligns with Hexagon’s long-term strategy to sharpen its focus and enhance value for shareholders.
Both companies are working to ensure a smooth transition. Cadence intends to fully integrate Hexagon’s engineering team into its operations. It values the team’s domain expertise and plans to retain their roles within the expanded organization. Moreover, Cadence aims to maintain existing customer relationships while offering improved service through a broader range of solutions.
This acquisition marks more than just a business deal; it represents a transformation in Cadence’s identity. Traditionally seen as a provider of tools for semiconductor design, the company is now evolving into a digital engineering firm with a much broader scope. By combining electronic and mechanical design capabilities, Cadence positions itself to meet the needs of today’s interconnected, intelligent products.
As industries demand more tightly integrated hardware and software systems, Cadence is preparing to deliver on that need. Therefore, this acquisition is not just about growth, it’s about adapting to a changing technological landscape and leading in the next phase of digital innovation.
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