Stockholm, Sweden – Sandvik has signed an agreement to acquire CNC Software Inc, a leading provider of CAD/CAM software solutions for manufacturing industries 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. The company gains a world-class CAM brand in the Mastercam software suite, as well as the industry’s largest installed base of around 270,000 licenses/users, a strong market reseller network, and well-established partnerships with leading machine makers and tooling companies, by acquiring CNC Software.
CNC Software has a strong market position in CAM, particularly for small and medium-sized manufacturing enterprises (SMEs), which will support Sandvik’s strategic ambitions to develop solutions to automate the manufacturing value chain for SMEs, while also providing competitive points solutions for large original equipment manufacturers (OEMs). Combining Mastercam’s strengths with Sandvik’s machining offering and know-how is expected to be a key enabler in automating customers’ end-to-end manufacturing processes.
Stefan Widing, President and CEO, Sandvik
Mathias Johansson, President - Design & Planning Automation Division, Sandvik Manufacturing Solutions
Meghan West, CEO, CNC Software, Inc
CNC Software is an independent, family-owned company that was founded in 1983 and is headquartered in Tolland, Connecticut, USA. It employs 220 people. The revenue for 2020 was $60 million, with an EBIT margin of 25-30 percent and a share of recurring revenue of approximately 60 percent. CNC Software has a historical annual growth rate of around 10 percent and is expected to outperform the estimated market growth of 7 percent.
Sandvik Manufacturing and Machining Solutions benefit from the underlying EBITA margin. However, in the first year following the closing date, revenues will be impacted by deferred revenue accounting adjustments, and the EBITA margin will be slightly dilutive to Sandvik Manufacturing and Machining Solutions. The impact on earnings per share will be slightly negative at first. Transaction costs of SEK 25 million are expected to be accounted for in the third quarter of 2021. The parties agreed not to reveal the purchase price. The deal is expected to close in the fourth quarter of 2021, subject to customary regulatory approvals. Sandvik will make a write-down of overlapping assets worth SEK 30 million in conjunction with the closing.
Stefan Widing, President and CEO, Sandvik, said, “This is in line with our strategic focus to grow in the digital manufacturing space, with special attention on industrial software close to component manufacturing. The acquisition of CNC Software and the Mastercam portfolio, in combination with our existing offerings and extensive manufacturing capabilities, will make Sandvik a leader in the overall CAM market measured in the installed base. CAM plays a vital role in the digital manufacturing process, enabling new and innovative solutions in automated design for manufacturing.”
To this, Mathias Johansson, President - Design & Planning Automation Division, Sandvik Manufacturing Solutions, added, “Mastercam will be the cornerstone in Sandvik’s CAM portfolio, further improving machining productivity by combining our machining know-how with their CAM expertise to improve quality and reduce waste for our customers. Specifically, we will leverage data capture and use to secure efficient tool selection and tool path optimization for our customers. I look forward to welcoming the CNC Software team to Sandvik.”
“We at CNC Software are extremely excited to be joining the Sandvik family. The two companies share many of the same values and objectives, but above all we share a passion for manufacturing. Together we will harness our joint resources to accelerate the development of Mastercam, while continuing to maintain our unique standards of local support through our experienced global Reseller channel. I am personally very excited at the prospect of working with Sandvik as it will allow us to accelerate our progress in achieving our mission, ‘To create software and services that solve the world’s manufacturing challenges,” said Meghan West, CEO, CNC Software, Inc.
The transaction is expected to close Q4 2021, subject to customary regulatory approvals. CNC Software will organizationally belong to the Design & Planning Automation division within Sandvik Manufacturing and Machining Solutions.
Image Source: Sandvik