PMTC has agreed to acquire MKS Inc. for C$26.20 per share, or C$293M in cash, subject to shareholder approvals. MKS develops application lifecycle management software, which helps customers manage the development of software products. We think this proposed acquisition will fit well strategically with PMTC's solutions, which focus on managing the development of hardware. However, we believe PMTC is overpaying, valuing MKS at an enterprise value-to-sales ratio of about 4.1X, compared to the industry average of 3.2X. We expect the deal to be neutral to FY 11 (Sep.) operating EPS.