mentor graphics merger - kpmg law · integration approach and value creation established...

Source: Siemens Digital Factory

| May 2018 | Jahreskonferenz M&A Integration

Restricted © Siemens AG 2018

siemens.com Restricted © 2018 Siemens AG

Mentor Graphics Merger Jahreskonferenz M&A Integration

Dr. Georg Arnswald | SVP Strategy and Business Excellence | Digital Factory Division

Frankfurt am Main, May 9, 2018


Page 3 | May 2018 | Jahreskonferenz M&A Integration


Digital Factory Division –

A highly profitable 11'' EUR business

Organization Digital Factory Division

Factory Automation

Control Products

Product Lifecycle Management

Motion Control

Customer Services

World market leader in automation with integrated automation portfolio for all industries

Products and systems to switch, protect and control low-voltage consumers

Proven software solutions to create, validate and manage product and process knowledge across the product lifecycle

Global leading supplier of products, systems and solutions including services: Drives, Motion Control Motors, CNC Solutions for machinery and plants

Integrated service offering from a single source throughout the product lifecycle

Integrated product portfolio paves the way for the Digital Enterprise.




Combining the real world with the virtual world

Proven through the systematic expansion of our portfolio

Siemens automation #1

Totally Integrated Automation1

1958 2000 2014 2010 2012 2016 2006 1996

O R S I

SIMATIC1

2017

Siemens software

2

1 In-house developments/digital upgrades 2 Cooperation

2018

Revenues FY2017:

Siemens AG: ~83'' EUR

therein Digital Factory: ~11'' EUR

therein 5 Business Units




Creating the most holistic digital twin available on the market

Digital Twin

product

Digital Twin

production

Digital Twin

performance

Digital Twin

product

Electrical design and simulation

Mechanical and environmental design and simulation

Software design and simulation

Automation

and shop floor




Mentor Graphics – a global company headquartered in Portland

• A global company headquartered

in Portland, Oregon

• 85 offices, 52 subsidiaries, ~6,000

employees

• Founded in 1981

• Revenue - 1.2 bn. USD

(57% intl.; 43% in U.S.)

• One of top three EDA vendors

• Focused on growth through internal

development

• R&D locations in USA, Armenia, Chile,

Egypt, France, Germany, Hungary, India,

Israel, Morocco, Pakistan, Poland,

Romania, Russia, Taiwan and UK




Our goal is to jointly build a new global software company that is

ready for future growth….by combining the best of both worlds

"Integration integration" "Merger integration"

Siemens

DF PL

Newly formed company

combining the best of

both worlds Mentor

Graphics

Siemens

DF PL

Siemens

DF PL

Mentor

Graphics




Keep

current practices

Change

current practices

The level of change at Mentor Graphics and Siemens PL

comes in 4 categories

DF PL

Change

current

practices

Keep

current

practices

DF PL adopts a world

class process from

Mentor Graphics

Both entities keep their

practices – little value

in changing practices

Jointly develop the next

practice – ready to support

a 5 billion EUR business

Mentor Graphics

adopts a world class

process from DF PL

Substantial

change

No

change Ensure mandatory

requirements

https://de.wikipedia.org/wiki/Datei:Mentor_Graphics_Logo.svg




Dedicated experts, process and toolkit provide the framework for

successful integrations into Siemens

Proven Post Merger Integration process brings together acquiring

business and dedicated Siemens integration experts for early planning of

integration approach and value creation

Established integration toolkit, tailored to the specifics of software

business requirements, provides the ideal working environment for a

multifunctional merger team staffed from both sided and lead by

experienced integration experts

A series of regular project weeks brings integration team and

management together to drive the project and facilitate value creation

activities




Special challenges need to be addressed during the

integration of an acquired listed SW company in the USA

Salary structures and incentives of a high tech

software company

Key employee retention

Solving complex tax structures in the context

of the changing tax legislation decided by the

new US administration

Business with US Government (DoD, DoE)

Merger with Siemens Industrial Software Business

(Siemens PLM) already headquartered in the USA,

with comp & ben structures, business processes

and infrastructure tailored to market industrial SW

Setup of a pre-close retention program for key

players

Development of a global, holistic tax concept under

leadership of Siemens corporate tax experts

CFIUS requirements have to be met, transfer of

affected business to Siemens Government

Technologies needs to be evaluated

DoD: U. S. Department of Defense; DoE: U. S. Department of Energy

CFIUS: Committee on Foreign Investment in the United States




Mentor Graphics with a global footprint – ads 97 offices and R&D

centers to the 200 existing DF PL locations

United States

Europe

Siemens DF location overview

Mentor location overview

Key takeaway:

…to secure the best technical talent big offshore R&D

centers were founded in "uncommon" countries…




Integration Roadshow to all major sites completed -

Positive feedback received from all visited locations

People – Site visit schedule, impressions, questions/statements (excerpts)

Ireland

(April 27)

India

(May 22-25)

Eastern Europe and Egypt

(June 11-16)

Western Europe

(June 26-29)

Asia

(July 18-21)

Questions:

What about AUTOSAR (AUTomotive Open System Architecture)?

future of Electronic Design Automation in Siemens PL? … Employment contract? Salary/Benefits?

Will the MentorGraphics/PL merge effect our individual employment contracts? Effects of existing compensation plans other than wage?

… Personal development?

Siemens educational training programs? Yearly review process? Job mapping? …

Changes into existing MentorGraphics structure,

how will "divisions" be managed?

Workplace?

Move to different office? Flexible working hours? Tracking of working time? …

It was a pleasure having you in Egypt […]

The feedback we have received from the

employees is amazing - they feel more

comfortable, positive and hopeful about […]

the future […]

Noha Chaaraoui

Egypt - Human Resources Manager

The presentation was very good to clarify

the overall strategy and directions […]

Hazem El Tahawy, PhD

Egypt - Managing Director MENA Region

I had a chance to speak to our employees

today and feel the positive change and

much more optimistic expectations from

Mentor/Siemens merger.

Irina Dumanyan

Armenia - Site Manager

Egypt, Cairo Armenia, Yerevan Armenia, Yerevan

Statements:

1

2

3

4

5

Shanghai, China Pangyo, Korea

Poland

(June 1)




Special challenges need to be addressed during the integration

of an SW company into a HW dominated organization

Sales

Steering

SW business

systems

SW

business

processes

Comp&Ben

HR

Governance

• Global processes for quotation, pricing and central processing of revenue recognition

• Channel discount/commission and royalty processing according SW specific IP structure

• SW specific legal terms & conditions regarding license handling and liabilities

• Global ERP system with full electronic license management (generation / seat control

and patching) and full global revenue recognition functionality

• Global CRM system with real time analytics and compensation functionality

• Strictly HQ owned sales steering with global end-to-end real time pipeline management

• Dedicated sales force with direct customer access offering SW solution for the future

• SW Industry specific compensation and benefits schemes with 50% variable part and

uncapped incentives, liberal car policy

• Global job & qualification levels for maximal flexible use of resources

• Globally consistent business steering and management ensures global business

execution and transparency, maximizes streamlining of support functions and avoids

local business optimization

Software specific business & process requirements




Key takeaways …

Building a new global software company that is ready for future growth by combining best of

both worlds > focusing on best practice solution rather than integrating one SW company into

the other. Open and respectful communication leads to increased employee engagement

Understand today's portfolio and define portfolio map for 2020 with priority > define initiatives

and feed into portfolio roadmap quickly monetize synergies

Global portfolio and global sales initiatives combined with roll-out-workshops already show great

enthusiasm which is reflected already in a steadily increasing synergy pipeline

mentor graphics merger - kpmg law · integration approach and value creation established...

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