Virtualware buys Virtalis to build European immersive software group
Virtualware (EPA: ALVIR), the Bilbao-based enterprise software company specialising in immersive and real-time 3D technologies, has completed the acquisition of 100% of Virtalis Holding, a Manchester-based virtual reality and RT3D visualisation software business. The deal closed following shareholder approval at an extraordinary general meeting held on 21 September 2026.
The transaction was structured as a fixed payment of €5 million on completion, plus a variable earn-out component linked to Virtalis's operating performance in 2026 and 2027. Funding came through a commercial debt syndicate backed by BBVA, the Instituto Vasco de Finanzas, Cofides and Elkargi. LKS Corporate Finance served as lead financial adviser; Geldars LLP advised on legal matters.
The deal
The combined group's pro forma revenue rises from €4.32 million to €10 million based on projected 2026 results, more than doubling Virtualware's scale in a single transaction. Virtalis, founded in 2003, brings a customer base that includes BAE Systems, Lockheed Martin, Thales, Blue Origin, Vestas, Ford, and Seaspan, among others, providing immediate exposure to aerospace, defence, energy, and automotive verticals.
Unai Extremo, chief executive and founder of Virtualware, described the acquisition as a milestone that "strengthens our product portfolio and expands our industrial customer base." The UK now accounts for 37.7% of the combined group's aggregate revenue and becomes its single largest market, while the proportion of revenue generated outside Spain rises from 54% to 78%.
The deal follows Virtualware's October 2024 acquisition of Simumatik, a Swedish emulation and digital twin technology specialist, confirming a pattern of structured inorganic growth across complementary European technology assets.
Market context
Industrial immersive visualisation and digital twin software sits at the intersection of several fast-moving technology categories. Demand is being driven by manufacturing digitalisation programmes, defence modernisation budgets, and the increasing adoption of model-based systems engineering in sectors such as nuclear and critical infrastructure. Competitors range from large-platform players, including PTC, Siemens Digital Industries and Dassault Systemes, to specialist mid-market vendors, with consolidation among the latter accelerating as customers seek integrated capability rather than point solutions.
The combined Virtualware-Virtalis entity positions itself as one of the larger independent European providers in this niche. Its defence and aerospace customer list, which includes primes such as Lockheed Martin and BAE Systems, gives it a degree of revenue predictability through long programme cycles, though it also exposes the group to procurement cycles that can shift with government spending priorities.
Regulatory and standards read-across
Virtualware is listed on Euronext Growth Paris, which carries lighter disclosure obligations than the main Euronext market, though the company will need to manage UK corporate governance requirements for its newly enlarged British subsidiary. Defence and nuclear customers typically impose supply-chain security and data-sovereignty requirements that could affect how the combined entity manages its cross-border software infrastructure. With headquarters in Spain and significant operations now in the UK, the group will also need to navigate any post-Brexit data transfer frameworks relevant to dual-use technology.
The earn-out structure, tied to Virtalis's 2026 and 2027 operating results, means integration risk will remain in focus for the next 12 to 18 months. Investors will look for the company to demonstrate revenue retention across Virtalis's existing customer base and to publish evidence of cross-selling between the two product portfolios.