Oct 31 (Reuters) - Siemens announced a $10.6

billion deal to buy U.S. engineering software firm Altair

Engineering ( ALTR ) overnight, cheering analysts who see it

boosting the company's presence in the fast-growing industrial

software market.

Still, there was some concerns about the high price Siemens

paid for Michigan-based Altair. The offer price of $113 per

share represents a premium of about 18.7% to Altair's close on

Oct. 21, a day before Reuters first reported the company was

exploring a sale.

The deal is Siemens's biggest acquisition since Siemens

Healthineers bought medical device maker Varian

Medical Systems for $16.4 billion in 2020.

Analysts at Alpha Wertpapierhandel said the deal, while not

cheap, would strengthen Siemens' struggling digital industries

division.

"Altair adds AI-powered design and simulation," Alpha said.

"All in all, longer term, this seems to be a good deal for

Siemens."

Jefferies analyst Simon Toennessen said the acquisition gave

Siemens more expertise around artificial intelligence and high

performance computers.

It would also make the group a more credible rival to

chip-design company Synopsys ( SNPS ), which agreed to buy

design software firm Ansys ( ANSS ) earlier this year, as well as Cadence

Design Systems ( CDNS )

Siemens shares were down 0.8% at 0827 GMT, against a 0.4%

decline in the wider index. The share price reaction might be

due to the cost of the deal, one trader said.

Altair, whose simulation software helps predict how products

would work in the real world, fits Siemens's strategy of using

its hardware and software to combine the real and digital

worlds.

The German maker of trains and factory equipment has been

trying to expand beyond its traditional industrial customers by

boosting its digital offering to improve the performance of its

production lines, trains and buildings.

The transaction is anticipated to add to Siemens' earnings

per share in about two years from the deal's closing, which is

expected in the second half of 2025.

It will also increase Siemens' digital business revenue by

about 8%, adding approximately 600 million euros ($651.4

million) to the company's digital business revenue in fiscal

2023.

The transaction would have a revenue impact of about $500

million per year in the mid-term and more than $1 billion per

year in the long term, Siemens said.

Siemens competes with Rockwell Automation ( ROK ), Emerson

Electric ( EMR ) and ABB in the industrial software

market which is currently worth an estimated $21.5 billion

annually and is forecast to grow by 16.7% per year.

Separately on Wednesday, Altair reported a 13% third-quarter

rise in revenue to $151.5 million.

Engineering software companies have become attractive

acquisition targets as investors bet on companies that could

benefit from the boom in artificial intelligence.

In January, Synopsys ( SNPS ) agreed to buy design software

firm Ansys ( ANSS ) in a $35 billion cash-and-stock deal.

($1 = 0.9211 euros)