LONDON (ShareCast) - (Sharecast News) - Shares in Hexagon rallied on Friday, after the Swedish firm struck a deal to sell part of its business to Cadence Design Systems.

The Stockholm-listed company has agreed to sell its global design and engineering business to the US firm, which makes software and hardware used in designing semiconductors.

Cadence will pay €2.7bn for the unit, 30% of which will be through the issuance of common stock to Hexagon and the rest in cash.

The sale is part of a wider plan by Hexagon, a specialist in measurement technologies, to streamline its portfolio and strengthen finances.

Ola Rollen, chair, said: "Our D&E business...has delivered strong results since we acquired MSC Software in 2017.

"However, the engineering simulation market is evolving rapidly, with electronic design automation suppliers increasing taking a leading role, a tread which is harder for Hexagon to follow.

"By transitioning D&E to Cadence...and establishing a long-term collaboration between our companies, we are creating a stronger future for our customers, employees and shareholders."

As at 1045 BST, the stock was trading 7% higher.

Cadence said the deal would give it a wider customer base. Aerospace and automotive original equipment manufacturers and suppliers who currently use Hexagon's D&E products include Volkswagen Group, BMW, Lockheed Martin, BAE and Boeing, among others.

The unit, which employs more than 1,100 people worldwide, generated revenues of around $280m in 2024.

The deal is expected to close in the first quarter of 2026, subject to regulatory approvals.

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