​Siemens acquires Mentor Graphics for $4.5 billion, eyes connected device, building expansion

Siemens said it will acquire Mentor Graphics in a deal valued at $4.5 billion to pursue what it dubs "mechantronics," or the convergence of mechanical, electrical and software design.

Mentor Graphics makes design automation and industrial software and will add to a series of purchases intended to make Siemens a key software player.

According to statement, Siemens will buy Mentor Graphics for $37.25 a share, or a 21 percent premium. Siemens said the purchase of Mentor Graphic's will give it electronics integrated circuit and systems design to fold into its digital enterprise software portfolio.

What Siemens is really hoping to do is leverage its software into smart connected products found in home and cities. Siemens said its software will become a key part of Industry 4.0 where the digital and physical converge.

In a presentation, Siemens outlined how a car illustrates what it is trying to do with its design tools. Here's Siemens software stack in a nutshell.

Siemens will offer integrated design software with its product lifecycle management tools with the aim of reaching everything from infrastructure to industrial equipment, smartphones, automotive and smart home and buildings.