Why Shares of Exa Corp. Are Surging Today

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What happened

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Shares of simulation software provider Exa Corp. (NASDAQ: EXA) soared on Thursday after the company announced that it had agreed to be acquired by Dassault Systemes (NASDAQOTH: DASTY). As of 12:11 p.m. EDT, Exa stock was up 42.9%, while shares of Dassault were flat.

So what

Dassault, a product development software company headquartered in Paris, France, and Boston, Massachusetts, has agreed to buy Exa Corp. for about $400 million, or $24.25 per share. Dassault will commence a tender offer within the next 10 business days to acquire all outstanding shares of Exa Corp., and the transaction is expected to close during the fourth quarter of 2017.

Exa Corp. CEO Stephen Remondi sees the acquisition as a way to expand the company's reach: "The combination of Exa with Dassault Systemes' 3DEXPERIENCE platform will provide Exa with the critical mass of manpower and technology required to accelerate the delivery of our shared vision of driving the value of digital engineering knowledge, enabling everyone in the value chain to access the power of simulation for critical business decisions."

The $24.25 offer price represents a 43% premium over the closing price on Wednesday.

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Now what

Dassault sees three main benefits in the acquisition. First, combining the expertise of both companies will allow Dassault to deliver more value to its customers. Second, combining the two companies is expected to increase collaboration with customers, allowing Dassault to offer integrated solutions. Finally, Dassault expects the combination to accelerate the company's ability to deliver new technologies for product design, engineering, and simulation.

With Dassault having a market capitalization of roughly $26 billion, this acquisition likely won't move the needle. But the company believes it will strengthen its business in the long run.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Dassault Systemes. The Motley Fool has a disclosure policy.