Alexa

Siemens says Texas company fills key hole in its lineup

Siemens says Texas company fills key hole in its lineup

The leader of UGS Corp. says his company had to grow to survive in the fast-changing business of making software to manage products through their life cycle _ and that being acquired by conglomerate Siemens AG accomplishes the same goal.
"It takes us from being a small player with limited resources to being a major player," said Tony Affuso, the chairman and chief executive of UGS.
Late Wednesday, Siemens announced it would buy UGS from private equity firms Bain Capital, Silver Lake Partners and Warburg Pincus for $3.5 billion (euro2.7 billion), including debt that officials for Siemens and UGS put at about $1.4 billion (euro1.08 billion).
Siemens will run UGS as part of its automation and drives group, which is based in Nuremberg, Germany, and managed by Helmut Gierse.
In a phone interview, Gierse said the software company would fit nicely with Siemens' factory-automation business, one of the German conglomerate's biggest and most profitable units.
"It opens up a fascinating possibility for us as the key automation supplier in the world, and UGS will widen our footprint in the United States," he said.
UGS is in the still-young business of PLM, or product lifestyle management. Its customers include automakers as well as aerospace and defense companies in the United States and Europe.
Although UGS lost $7.4 million (euro5.7 million) in the Sept. 30 quarter, and $22 million (euro16.95 million) in 2005, the company has reported 13 straight quarters of year-over-year sales growth and annual revenue of more than $1.1 billion (euro850 million).
Affuso said the company took on more than $1 billion in debt when Electronic Data Systems Corp. sold it to the private equity firms for $2.05 billion in 2004, and added more to buy back preferred shares.
Since then, he said, the company has built up its sales organization and invested in products and marketing, he said. Executives kept reviewing a checklist for taking the company public, but never got close to an IPO, he said.
Gierse said the negotiations to buy UGS took less than six months. He said Siemens hopes to complete the purchase before midyear. The deal will require approval of regulators in the United States and Europe, but Gierse said there was virtually no overlapping business and he didn't expect antitrust concerns to arise.
For Siemens, the UGS purchase is part of a restructuring strategy that has included several large acquisitions. The company is trying to shed an unprofitable telecommunications equipment division while buying companies in other lines, including medical diagnostics and water treatment.
The Munich-based conglomerate is also dealing with regulatory problems and investigations. On Wednesday, European Union regulators ordered Siemens to pay $517 million (euro398.4 million) for helping fix prices for heavy equipment used by power utilities. Authorities are also investigating suspected bribes to win contracts.
On Thursday, Siemens reported that its profit in the Dec. 31 quarter fell 16 percent because of the price-fixing fine, but would otherwise have jumped 51 percent, to $2.1 billion (euro1.6 billion).
U.S.-traded shares of Siemens rose $4.90, or 4.9 percent, to close at $105.09 on the New York Stock Exchange.