Siemens agreed to buy US-based Mentor Graphics in a $4.5 billion (€4.17bn) all-cash deal that will further build the German engineering group's software capabilities.

Siemens said on Monday it would pay $37.25 per share for Mentor – which makes software for designing semiconductors – a 21 per cent premium to Friday’s closing share price.

Siemens has increasingly had to compete with software companies who can develop technology faster because they have a sole focus and has identified software as a growth area in its “Vision 2020” strategy.

Siemens expects the acquisition of Mentor to add to its earnings within three years and result in savings that will lift earnings before interest and tax (Ebit) by more than €100 million within four years.

– Reuters