German conglomerate Siemens AG, Europe's largest engineering
company, has agreed to acquire PLM software developer UGS Corp. in a
$3.5 billion deal. The purchase price is $2.1 billion, with Siemens
assuming UGS debt of $1.4 billion. At the same time, Siemens is selling
shares of its car-equipment unit. Both deals are part of the continued
overhaul of Siemens by new CEO Klaus Kleinfeld.
The selling ownership is a partnership of Bain Capital LLC, Silver
Lake Partners, and Warburg Pincus LLC; they acquired UGS in 2004. In
June 2006 UGS CEO Tony Affuso was quoted as saying the company might go
public in 2007. At the time, he speculated the company would be valued
in an initial public offering (IPO) at between $3 billion to $4.6
billion.
Siemens is Germany's largest conglomerate and among Europe's largest
electronics firms. Its divisions range from telecommunications-network
equipment to financial services. Siemens reported sales of $110.8
billion in the 12 months that ended September 2006. Under new CEO
Kleinfeld Siemens has been buying and selling assets, in a promise to
cut costs and raise profit margins. This week Siemens and nine other
companies were fined a total of $978 million by the European Union for
running a cartel to fix prices for heavy equipment used by power
utilities. Siemens' portion was $517 million; the EU said it played a
leadership role in the affair.
UGS will join the Siemens Automation and Drives Group (A&D). In
announcing the acquisition, Siemens said “A&D will thus become the first
supplier for the manufacturing industries to provide an end-to-end
software and hardware portfolio encompassing the complete lifecycle of
products and production facilities.” A company spokesman said top
executives of UGS, including Affuso, plan to make the transition to
Siemens.
In a conference call with editors and analysts, executives for both
UGS and Siemens A&D stressed the “best of breed,” “first mover,” and
“virtual to physical” nature of this merger. “Integrating these two
product lines will really drive change,” said Tilo Brandis, senior
executive and integration officer for Siemens. “We will have seamless
information flows and make our customers faster.”
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