National Instruments in Austin, Texas has announced its plans to acquire OptimalPlus Ltd., an Israeli company that makes data-analytics software for semiconductor, automotive and electronics companies. The deal is for $365 million, which will come from both cash on hand and debt, according to the announcement from National Instruments. National Instruments’s executives say they expect the acquisition to be completed during the third quarter of 2020. The deal still must gain regulatory approval and other standard closing conditions.
The 240-employee OptimalPlus generated $51 million in revenue last year, the announcement said.
National Instruments historically has developed testing equipment for engineers around the globe, including those producing semiconductors and medical devices. The company now also provides a software platform to enhance performance of automated test and measurement systems.
“The addition of OptimalPlus’ data analytics capabilities will enable us to accelerate our growth strategy by increasing enterprise-level value for shared customers in the semiconductor and automotive industries,” National Instruments President and CEO Eric Starkloff said in a statement.
Starkloff went on to say that his company’s acquisition of OptimalPlus is “an opportunity to further accelerate some things that will help drive our growth long-term, and take us into sort of really exciting technology area.”
National Instruments was founded in 1976 by James Truchard, Bill Nowlin, and Jeff Kodosky. Since that time, it has grown into a tech giant. The company reported $1.4 billion in revenue in 2019.
The acquisition of OptimalPlus is the company’s biggest ever.
National Instruments specializes in testing and measurement hardware and software systems used in a number of industries, mostly by engineers and enterprises. It’s one of the largest tech employers in Central Texas, with about 2,200 local workers and 7,000 employees worldwide.
Founded in 2005 by CEO Dan Glotter, OptimalPlus develops artificial intelligence tools. Its headquarters in Holon, Israel will become National Instruments’ development center.
OptimalPlus also has locations in Asia, Europe, and the United States. The company has raised roughly $81 million from investors including Israeli VC funds Viola, Pitango Venture Capital, Evergreen Venture Partners, and investment firm KKR, according to data compiled by Start-Up Nation Central.
The acquisition announcement explained that National Instruments and OptimalPlus have highly complementary activities in the semiconductor, automotive, and electronics industries. The deal is designed to broaden The company’s enterprise software capabilities and provide customers with insights about their product development through the advanced product analytics offered by OptimalPlus.
While staying true to its founding mission, National Instruments is going through an evolution, explained CEO Starkloff, who assumed the top job in February.
National Instruments has traditionally sold its products to engineers, so its customers have typically been “an engineer designing a product, or in a lab trying to do things like launch a satellite, and they’re using our technology to enable them to do that,” Starkloff said.
However, National Instruments is now seeking to alter its business model.
“Increasingly as the company has grown, we’re selling not only to engineers, but to enterprises,” Starkloff said.
The CEO said National Instruments has focused on three market segments: aerospace, defense and government; electric and autonomous vehicles; and 5G connectivity. Its decision to focus on these market segments aligns with the company’s reputation as a leader in testing and validation tools. One observer said that those are three markets with the biggest level of growth in the industry. In addition, they are areas with the greatest needs for the equipment and tools that National Instruments makes.
Starkloff also remarked that the strategy also provides a vision for how the company’s testing equipment can be integrated into different market segments,
“Our system for testing an autonomous or electric vehicle is different from our system designed to test satellite payload, but the building blocks for the systems are the same,” Starkloff said.
National Instruments has brought in strategic leaders to represent the company’s focus in those three key market areas. By adding professionals with industry-specific knowledge at these positions, Starkloff said the company is equipped to understand the needs of engineers, as well as their managers and executives.
Finally, he said that part of being at the leading edge is making certain that his company’s M&A strategy supports its more enterprise-facing business strategy, and to continue growing organically through investment into research and development.