From AFX News Limited
DALLAS — German conglomerate Siemens AG agreed last week to buy business software maker UGS Corp. from three private-equity firms for about $2.1 billion and the assumption of $1.4 billion in UGS debt.
The sellers — private-equity firms Bain Capital, Silver Lake Partners and Warburg Pincus — bought UGS for $2.05 billion in 2004.
The deal will require approval of regulators in the United States and Europe, and the companies did not set a timetable for completing the sale, said John Clendening, a UGS spokesman.
Plano, TX-based UGS, which was spun off from Electronic Data Systems Corp., makes software used in product design and development. Customers include automakers, aerospace and defense companies. Competitors include software vendors and developers such as Dassault Systemes SA, Parametric Technology Corp. and SAP AG. The company has 6,400 employees and 900 contractors.
UGS had revenue of $1.15 billion but lost $22 million in 2005, according to a regulatory filing. A spokesman said UGS has recorded 13 straight quarters of year-over-year revenue growth.
Clendening said there was little overlap between UGS and its corresponding division at Siemens, but that the impact of the deal on jobs had not been determined. The business will remain based in Plano, he said.
Top executives of UGS, including Chairman and Chief Executive Anthony Affuso, plan to make the transition to Siemens, Clendening said.
EDS was trying to shore up its balance sheet when it sold the unit in 2004. EDS officials said UGS was healthy and profitable but not part of their strategy for growth. At the time, the buyers called it the largest private-equity purchase ever of a technology company, although many much-bigger deals have been consummated since then.
Private-equity firms, which raise money from institutions looking to beat their returns on the stock market, usually make purchases not to hold companies but to cash out by flipping them to new buyers or taking them public.
Siemens is Germany’s largest conglomerate and among Europe’s largest electronics firms. Its divisions range from telecommunications-network equipment to financial services. Siemens, which was scheduled to report quarterly results Thursday, had sales of $110.8 billion in the 12 months that ended in September.
Siemens has bought and sold assets since Klaus Kleinfeld became chief executive last year and promised to raise profit margins. Siemens sold off unprofitable telecommunications equipment holdings and a minority stake in a chip maker while buying Bayer’s medical-diagnostics division and other businesses.
European Union regulators on Wednesday fined Siemens and nine other companies a combined $978 million for running a cartel to fix prices for heavy equipment used by power utilities. Siemens was ordered to pay $517 million — the second-highest cartel fine the EU has ever levied — because it played a leadership role in fixing prices.
U.S.-traded shares of Siemens rose $1.77, or 1.8 percent, to close at $100.19 on the New York Stock Exchange.
Copyright 2007 AFX News Limited. All Rights Reserved.