Autodesk Inc., known for its AutoCAD design software, has signed a deal to buy Moldflow Corp., a maker of computer-aided-engineering software for plastics, for about $297 million.
Autodesk and Moldflow, both publicly traded on Nasdaq, announced the deal May 1. San Rafael, Calif.-based Autodesk will pay $22 per share for Framingham, Mass.-based Moldflow. The plastics software company has research and development offices in Melbourne, Australia, and Ithaca, N.Y., and sales offices around the world.
``We think plastics is where the future is. We think it's a very important market,'' said Carl Bass, Autodesk's president and chief executive officer.
Moldflow is considered to be the leader in CAE software that simulates how plastic flows into an injection mold, allowing product and mold designers to optimize how plastic components will perform during each phase of the design and manufacturing process. The company has 285 employees and generated 2007 sales of $55.9 million.
Roland Thomas, Moldflow's president and CEO, said the company generates about 35 percent of its sales in the growing Asia-Pacific region, 17 percent in the Americas and the rest in Europe.
The much-larger Autodesk reported $2.17 billion in sales for the fiscal year ended Jan. 31.
Bass called Moldflow ``a leader in computer-integrated manufacturing [that] brings strong analysis and simulation capabilities'' to what he called Autodesk's digital prototyping products. Digital prototyping, done entirely on a computer, can reduce the need for designers to use more-costly physical models, he said.
In a conference call with analysts, Bass said Moldflow is an attractive company. ``The plastics market represents a tremendous opportunity. It's the fourth-largest manufacturing industry in the U.S., at over $320 billion, and growing quickly.''
Buying Moldflow, Bass said, ``will enable Autodesk to provide suppliers in the automotive, electronics, health-care and consumer products markets with a fully digital development process for plastic injection part and mold design.'' The two companies' products are complementary, he added.
David Weisberg, a Denver-based analyst who follows the engineering software sector for Cyon Research Corp. of Bethesda, Md., said buying Moldflow fills a gap in Autodesk's product offering by bringing computer-aided manufacturing - the ability to convert a part design directly into the metalworking process to cut injection molds.
The acquisition, he said, ``says the next thing on the agenda is to plug the CAM gap.''
AutoCAD, introduced in 1982, is a well-known brand. ``They have dominated the midrange drafting market for the last two decades,'' Weisberg said.
Autodesk went public in 2000, then used the proceeds to buy a competitor, C-Mold, and to expand its products and make other acquisitions. Moldflow bought MSI Corp. to gain hot-runner temperature controls in 2004. Other deals brought Moldflow plantwide monitoring and production monitoring.
In mid-2007, Moldflow sold the hot-runner controllers and the plantwide monitoring business to Husky Injection Molding Systems Ltd. in Bolton, Ontario.
Moldflow focused on its core strength in CAE software.
Bass said Autodesk's purchase price of $22 a share is a 36 percent premium over Moldflow's 90-day average closing price on Nasdaq.
During the conference call, one analyst asked Bass if the deal is too expensive. Autodesk will pay about $297 million, minus the amount of money in Moldflow's cash balance at the time of closing and proceeds from options exercises. The exact numbers were not spelled out in the announcement.
Bass told the analyst that the actual price is three times Moldflow's sales.
``That's what you can expect for a reasonably growing, reasonably profitable software company,'' he said.
Bass added that the value of Moldflow is set by the public stock market. Also, he said, Moldflow is in a strong global market position in the plastics industry, which will continue to grow.