With the acquisition of CNC Software, Sandvik gains the largest installed base of 270,000 Mastercam licences and users in the industry. Sandvik also gains access to an extensive market reseller network and well-established relationships with leading machine makers and tooling companies.
Sandvik has signed an agreement to acquire CNC Software Inc., a leading provider of CAD/CAM software solutions for the manufacturing industry and the company behind Mastercam, the industry's most widely used Computer-Aided Manufacturing (CAM) brand. CNC Software will be reported in Sandvik Manufacturing and Machining Solutions' Design & Planning Automation division.
“This is in line with our long-term strategy of expanding in the digital manufacturing space, with a focus on industrial software that is close to component manufacturing. The acquisition of CNC Software and the Mastercam portfolio, combined with our existing offerings and extensive manufacturing capabilities, will position Sandvik as the market leader in terms of the installed base in the overall CAM market", says Sandvik President and CEO Stefan Widing.
“CAM is essential in the digital manufacturing process because it allows for new and innovative manufacturing design solutions", added Mr Widing. Sandvik’s strategic ambitions to develop solutions to automate the manufacturing value chain for SME’s – and deliver competitive point solutions for large original equipment manufacturers (OEM’s) – will be supported by CNC Software’s strong market position in CAM, particularly for small and medium-sized manufacturing enterprises (SME’s).
Combining Mastercam’s strengths with Sandvik’s machining offering and expertise is expected to be a key enabler in automating customers’ end-to-end manufacturing processes. “Mastercam will be the cornerstone of Sandvik’s CAM portfolio, helping our customers improve quality and reduce waste by combining our machining expertise with their CAM expertise. We’ll use data capture and analysis to ensure that our customers get the most out of their tool selection and tool path optimization. I’m looking forward to meeting the CNC Software team and welcoming them to Sandvik,” says Mathias Johansson, President of Sandvik Manufacturing Solutions’ Design & Planning Automation Division.
CNC Software is a privately held, family-owned company with 220 employees based in Tolland, Connecticut, United States. The revenue for 2020 was USD 60 million, with an EBIT margin of 25-30% and a recurring revenue share of approximately 60%. CNC Software’s annual growth rate has been around 10% in the past, and it is expected to outperform the estimated market growth of 7% this year.
Sandvik Manufacturing and Machining Solutions benefit from the underlying EBITA margin. However, revenues will be impacted by deferred revenue accounting adjustments in the first year following the closing date, and the EBITA margin will be slightly dilutive to Sandvik Manufacturing and Machining Solutions. The initial impact on earnings per share will be slightly negative.
The price of the purchase was agreed upon by the parties. Subject to customary regulatory approvals, the deal is expected to close in the fourth quarter of 2021. Sandvik will write down overlapping assets worth SEK 30 million in conjunction with the closing.
