German conglomerate Siemens AG will pay $3.5 billion to pick up product lifecycle management software provider UGS Corp. and will launch an IPO of automotive engineering unit VDO.
The UGS deal will add industrial software for planning, design, and simulation to the automation-technology portfolio of its factory-automation unit, A&D.
Plano, Tex.-based UGS is owned by three private equity firms—Bain Capital, Silver Lake Partners and Warburg Pincus, which bought UGS from technology services provider Electronic Data Systems in March 2004 for $2.05 billion.
“With the acquisition of UGS, we combine its competence in the sector of digital factories with our leading know-how in industrial automation,” said Klaus Kleinfeld, president and chief executive of Siemens AG.
“Our customers win through the backing of the long-term security of their system investments provided by one of the world’s largest and most successful and innovative companies,” said Tony Affuso, chairman, chief executive, and president of UGS.
UGS had revenue of $1.15 billion in 2005, according to the company’s Web site. The company has a global workforce of 7,300 and more than 46,000 customers in 62 countries. PLM software is an enterprise business platform that helps companies digitally create, build, and manage their products. UGS’s main customers are in the automotive, aerospace and defense, consumer goods, electronics, and machinery industries.
Meanwhile, Siemens said it planned an initial public offering of VDO, which had annual sales of $13 billion (€10 billion) in the last fiscal year. Siemens said it would hold a majority stake in VDO, but a spokesman declined further comment on the size of the stake.
An IPO would give that business additional financial resources and flexibility for future growth, Siemens said. VDO is an automotive supplier of products that relate to the drivetrain, engine management electronics, and fuel injection that simultaneously improve engine performance and reduce emissions.