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Siemens Automation and Drives acquires UGS

26 January 2007

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Siemens Automation and Drives says it will become the world's first supplier of software and hardware across the complete lifecycle of products, as it expands its industrial software portfolio through a definitive agreement to acquire UGS Corporation, a worldwide leading provider of Product Lifecycle Management (PLM) software and services. The agreement was made between Siemens and the current owners, Bain Capital, Silver Lake Partners and Warburg Pincus. The purchase price amounts to US$3.5billion, including assumption of existing debt. The activities of UGS are to be assigned to the Siemens Automation and Drives Group (A&D). The transaction is subject to the approval by the relevant authorities.

With a global workforce of 7300 and more than 46,000 customers in 62 countries, UGS is a worldwide leader in PLM software and services. PLM is a mission-critical, enterprise business platform that helps companies innovate and grow by enabling them to digitally create, build and manage their products. UGS supplies customers in the automotive, aerospace and defence, consumer goods, electronics and machinery industries. UGS and Siemens A&D already started their business relationship in 2003 with joint projects addressing digital manufacturing technology.

UGS' software portfolio covers the entire array of collaborative Product Data Management (cPDM), computer-aided design/computer-aided manufacturing/computer-aided engineering (CAD/CAM/CAE) and digital manufacturing simulation ('digital factory'); the company holds strong revenue and market share positions globally in digital manufacturing and cPDM - the fastest-growing segments within the PLM market. In the 2005 fiscal year, the company reported revenue of just under US$1.2billion; in the third quarter of 2006, the company reported its thirteenth consecutive quarter of year-on-year revenue growth.

Klaus Kleinfeld, President and CEO of Siemens AG, comments: "With the acquisition of UGS, we 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 the unique combination, we underscore our position as a trendsetter in automation systems and bring this business into a new dimension."

The offer of Siemens A&D is based on a comprehensive, technologically consistent product portfolio ('Totally Integrated Automation'), enabling Siemens to provide every customer with an integrated package of engineering and automation systems. By integrating more than 3000 UGS software engineers, the Group will employ around 7000 software experts in total. Helmut Gierse, President of Siemens A&D, explains: "Seamless flow of information and data enable collaboration across the whole value chain. This is becoming crucial to increase productivity in the 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. Integrated solutions will lead to reduced production costs, higher product quality, shorter time to market and increased flexibility toward market trends. On the basis of our unique offer, we aim at a long term continuation of sustainable value enhancement for A&D."

The world market for PLM software and services has a volume of approximately US$13billion, with projected yearly growth rates of 7 to 9 per cent. From a technological point of view, the market will be influenced by the convergence of product lifecycle, manufacturing and enterprise information technologies in many segments. The previous islands of product development, manufacturing and service software will increasingly transform into one integrated systems business. This enables a 'complete solution supplier' to achieve higher growth rates, greater value added and possibilities for differentiation from competitors.

The design of future production systems will reach from the creative product-design process with CAD tools to the choice and design of logistics, service and recycling strategies. Through the use of smart and modular mechatronic systems, production will be changed and adjusted swiftly and flexibly. One of the key differentiating factors of success will be the early engineering phase establishing a digital link between product development and production, including product traceability facilities and possibilities to synchronise with merchandise management systems.

Siemens A&D and UGS are each known for their leadership in open standards and interfaces in their respective industries. Gierse states: "By combining expertise in the physical world of automation and the virtual world of PLM software, Siemens will be the only company able to offer integrated software and hardware solutions to its customers throughout their whole production process. All our future industrial software and hardware products will support today's and future leading interfaces and standards. We aim to be the first to market with innovative digital factory solutions, which truly unify the engineering and automation domain."

Tony Affuso, chairman, CEO and president of UGS adds: "The combination of Siemens and UGS is a clear game-changer in the global PLM industry due to our shared vision of 'Totally Integrated Automation'. 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. In addition, we are able to provide added value to Siemens' customers by virtue of being the most practiced PLM provider in open systems, which eases integration with the Siemens technology already in place in all of our key markets."

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