French energy-technology company Schneider Electric has agreed to acquire U.S. industrial-software company PTC for $22.6 billion in cash.

The transaction is Schneider Electric’s biggest acquisition and will significantly expand its software business.

Under the agreement, PTC shareholders will receive $205 per share in cash. Schneider Electric said the offer represents a premium of more than 42 percent over PTC’s share price before the deal was announced.

PTC develops software used by industrial companies for product design, engineering, manufacturing and managing data.

Its technology can help businesses create digital models of products and connect information across different stages of production.

Schneider Electric believes the combination will allow it to offer customers a broader range of digital and industrial solutions.

The company expects the deal to generate significant cost savings and additional revenue through cross-selling between the two businesses.

The acquisition also shows how traditional industrial companies are increasingly investing in software and artificial intelligence.

Businesses are looking for ways to combine physical infrastructure with digital tools that can improve manufacturing, energy management and industrial operations.

If completed, the transaction will become a major test of Schneider Electric’s strategy to build a larger software business.

PTC shareholders and regulators will still need to complete the required steps before the acquisition can close.

Sources: Reuters and PTC.