Schneider Electric Inc., one of the world’s largest industrial companies, today announced plans to acquire PTC Inc. for $23.7 billion.

The all-cash deal values the software maker at $205 per share. That represents a 42% premium to its last closing price.

PTC is best known for its Creo application, which engineers use to design hardware products such as car parts and medical devices. After a hardware team creates a product design, it can use a built-in simulation tool to check for issues. The simulator evaluates how well the product would withstand demanding operating conditions such as high temperatures.

Engineers have to adapt their product design to the machinery with which it will be manufactured. A 3D printer, for example, presents a different set of challenges than a robotic arm. Creo can identify the material combination that is best suited for a given manufacturing method. It also helps engineers find ways to speed up production and reduce material waste.

PTC offers Creo alongside more than a half-dozen other applications. Mathcad enables hardware teams to share calculations, charts and explanatory text with colleagues. Codebeamer helps software teams write code for physical products. PTC says the latter application automates tasks such as checking over-the-air updates for bugs.

The company’s software portfolio also extends beyond product development. After an industrial manufacturer ships a piece of equipment to a customer, it can use a PTC tool called Orbit to monitor the system’s health. Furthermore, the software maker offers applications that can be used to dispatch technicians and track down spare parts.

Schneider Electric sells its own lineup of software tools. But whereas PTC’s applications are mainly designed for hardware development, Schneider Electric focuses on hardware management.

Utilities use the company’s applications to maintain grid infrastructure. Manufacturers, in turn, rely on Schneider Electric software to optimize production. The company also has a suite of applications for data centers. The latter lineup promises to ease tasks such as managing cooling equipment and fixing server outages.

The PTC acquisition is set to position Schneider Electric as a major provider of software for both making and operating industrial equipment. The French company, which is best known for making electrical equipment such as transformers, expects to realize €800 million in annual revenue synergies within three years of closing the deal. It’s also targeting €250 million in annual savings.

“Together, we are creating the industry’s most complete software & AI powerhouse and highest-quality portfolio bridging the physical and digital worlds,” said Schneider Electric chief executive Olivier Blum.

The companies expect to close the acquisition by the third quarter of 2027.

Photo of Schneider Electric’s headquarters: Wikimedia