France's Dassault Systèmes SA on Tuesday, May 17, said it has agreed to buy U.S. software maker Abaqus Inc. for $413 million in cash, plugging a hole in its product range and diversifying into the fast-growing simulation-software market.

The deal gives Dassault access to Abaqus' novel software, which it will use to simulate physical tests — such as a drop test on a mobile phone. That will make Dassault one of the dominant players in the lucrative simulation-software market, now worth about $2.3 billion and projected to grow to 12% a year, to reach $4 billion within five years, according to Dassault.

"We hope to grow even faster than that," Dassault CEO Bernard Charlès told journalists in a Tuesday conference call.

Providence, R.I.-based Abaqus was founded in 1978 by David Hibbitt, Bengt Karlsson and Paul Sorensen and is owned by them and other managers.

Abaqus has total annual revenue of almost $100 million and "a strong level of profitability," a spokeswoman said.

"The price looks a little expensive at 4 times sales, but Abaqus has a strong Ebit of 26% — on that measure it matches consensus," said Lionel Pellicer, a Paris-based analyst at Fideuram Wargny. The purchase of Abaqus would immediately boost earnings, excluding the acquisition costs and the impact of deferred revenue accounting treatment, Dassault said.

The ability to simulate the effects of external stresses, like shocks, heat and loads, is a core part of design testing for many of its customers, which include Boeing Co., IBM Corp., Motorola Inc. and Siemens AG. Abaqus software will replace expensive "niche" simulation software that Dassault had developed for specific clients, Charlès said.

Analysts generally applauded Dassault's move. The deal "looks well thought out and will allow Dassault to move away from the pack," WestLB AG analysts said in a note announcing an upgrade of Dassault stock to outperform from neutral.

Dassault, which is based in Suresnes on the outskirts Paris, had been widely tipped to make an acquisition this year after amassing a war chest, which will have been largely exhausted after the Abaqus deal, analysts said.

The deal is subject to approval by regulators but is expected to be completed by the end of September.

Dassault, advised by Morgan Stanley and on the legal side by Ropes & Gray LLP, rose 1.5% to €38.24.

Abaqus was advised by Sonenshine Partners' Marshall Sonenshine, Cyrus Deboo and Temy Mancusi-Ungaro. The boutique investment banking firm was previously known as Sonenshine Pastor & Co. LLC. Abaqas took legal advice from Paul, Hastings, Janofsky & Walker LLP's Tom Kruger, Scott Hudson and Steven Reinhardt