Siemens to Acquire UGS

German industrial giant Siemens AG (www.siemens.com) said on Jan. 25 that it will acquire UGS Corp. (www.ugs.com), the Plano, Texas-based supplier of product lifecycle management (PLM) software, for about $3.5 billion, including debt. UGS generated sales of just under $1.2 billion in fiscal 2005. Siemens reached a definitive agreement for the acqusition with UGS’ current owners, Bain Capital, Silver Lake Partners and Warburg Pincus. The activities of UGS will be assigned to the Siemens Automation & Drives (A&D) Group.

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The UGS deal, which is subject to approval by relevant authorities, means that Siemens A&D, a supplier of industrial automation technology, will now be able to offer its customers worldwide solutions for creating digital factories, Siemens said.

“With the acquisition of UGS, we can combine its competence in the sector of digital factories with our leading know-how in industrial automation. This combination makes our customers’ processes faster, better and more cost efficient. With this unique combination, we will underscore our position as a trendsetter in automation systems and propel this business into a new dimension,” said Klaus Kleinfeld, president and chief executive officer of Siemens AG.

Siemens said the combination of Siemens A&D and UGS will generate substantial synergies. UGS is one of the world’s market leaders for PLM software, a critical part of industrial manufacturing that allows the digital control of product development and manufacture.

The market for PLM software and services has an annual volume of around $13 billion and growth rates between 7 percent and 9 percent, according to Siemens. Combining the PLM solutions of UGS with Siemens’ automation technology will enable Siemens for the first time to provide integrated offerings covering the entire product lifecycle. Siemens is thus the first company in the world able to offer its customers fully integrated solutions for creating digital factories that will give the customers decisive competitive advantages through reduced costs and improved quality assurance, the company said.

Siemens AG also announced plans for an initial public offering (IPO) of its automotive supply business, Siemens VDO Automotive (SV), in which Siemens would hold a majority stake. This move would give SV the necessary financial resources and greater entrepreneurial flexibility for ensuring further sustainable and profitable growth, the company said.

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