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Dassault Acquires MatrixOne

Posted on Thursday, Mar 2nd 2006

MatrixOne has been wanting to get acquired for quite a while. Finally, it has happened.

MatrixOne, the provider of product lifecycle management (PLM) tools, is being acquired by France’s Dassault Systems in a cash deal valued at roughly $408 million. More coverage here and here.

The basis for the deal, besides consolidation, is Dassault’s motivation to diversify in segments other than Aerospace and Automotive, their main strongholds, as well as the fact that PLM is a higher growth market than CAD, Dassault’s mainstay.

MatrixOne has been in a very tight spot for a number of years, trying to be Switzerland in an industry, that is, by and large, driven by deep CAD intergation (a la ProE+Windchill from PTC). This announcement is an absolutely splendid news for them, because now they CAN align with a deep-pocket CAD vendor, and access IBM Global Services as a powerful sales channel. IBM GS is Dassault’s primary SI channel, and is an enourmously effective one for an industry like PLM that depends heavily on third party integrators.

Frankly, I don’t think you can be successful being Switzerland in the CAD industry, which is why I have questioned Adobe’s strategy around 3D Acrobat and suggested that Adobe starts to align with Autodesk’s enemy camp.

MatrixOne has lost money every year for the last 10 years, except in 2001 they made a small profit. Revenues have stagnated and hovered around the $100M-$120M range for 5 years, causing a great deal of investor anxiety. What happened today, in form of an exit into Dassault, should have happened long back: i.e. alignment with a CAD vendor.

Meanwhile, they experimented with EDA, by acquiring Synchronicity, which was a decent strategic diversification initiative. Dassault’s interest in Electro-Mechanical will find good vibes in this area.

Bottomline: a long overdue acquisition. Glad it has happened.

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Christian Buckley Thursday, March 9, 2006 at 3:06 AM PT