Siemens To Buy UGS

Manufacturing Engineering, Mar 2007

Controls and automation giant Sieens AG (Munich) has agreed to buy PLM software and services supplier UGS Corp. (Plano, TX) in a deal valued at approximately $3.5 billion, including the assumption of existing debt.

Under terms of the definitive agreement, Siemens will purchase UGS from its current owners, venture capital firms Bain Capital, Silver Lake Partners, and Warburg Pincus. Siemens plans to assign UGS' activities to Siemens Automation and Drives Group (A&D, Nuremberg, Germany) which, according to the company, would make the A&D group 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. The deal is subject to approval by regulatory agencies.

A leading PLM supplier, UGS currently has a global workforce of about 7300 employees, and the company was acquired just three years ago by the venture capital group from EDS Corp. (Piano, TX) for $2.05 billion. UGS had fiscal 2005 revenues of $1.2 billion, and in the third quarter of 2006 it reported its 13th consecutive quarter of yearover-year revenue growth.

UGS supplies its PLM software for customers to digitally create, build, and manage products in the automotive, aerospace and defense, consumer goods, electronics, and machinery industries around the world. UGS and Siemens A&D have been working together since 2003 with joint projects addressing digital manufacturing technology.

"With the acquisition of UGS, we combine its competence in the sector of digital factories with our leading know-how in industrial automation," notes Klaus Kleinfeld, Siemens AG president and CEO. "This combination makes our customers' processes faster, better, and more cost efficient. With the combination, we underscore our position as a trendsetter in automation systems, and bring this business into a new dimension."

With the addition of UGS, Siemens A&D will offer customers an integrated package of engineering and automation systems, according to Siemens. By integrating more than 3000 UGS software engineers, the Siemens unit will employ about 7000 software experts in total. "Seamless flow of information and data enable collaboration across the whole value chain," notes Helmut Gierse, president of Siemens A&D. "This is becoming crucial to increase productivity in manufacturing industries where the competitive pressure is constantly rising.

"With the combined portfolio of A&D and UGS, our customers will be able to enter a complete new scale of efficiency, whether they are manufacturers, engineering service partners, system integrators, or machine builders," Gierse adds. "Integrated solutions will lead to reduced production costs, higher product quality, shorter time-to-market, and increased flexibility toward market trends."