Sold!!!UGS Goes to Germany's Siemens

Siemens AG of Germany agrees to buy UGS Corp. for US$3.5 billion. To afford the purchase, Siemens is selling shares in VDO, a automotive engineering firm. The purchase may have to be approved by regulators, and there is no timetable for completing the purchase.

The three private equity firms who took UGS private have profited handsomely -- 70% in under two years. They had bought UGS from EDS in March 2004 for $2.05 billion. UGS acted as if it planned to go public with an IPO later this year. I guess the equity firm owners saw more profit in reselling UGS to someone else.

More here.

Siemens is in trouble with the EU, as one of ten firms fined for price-fixing. The company had revenues of $110.8 billion last year.

Update

UGS becomes part of Siemens' Automation and Drives Group, which may sound odd to our ears. With the addition of UGS's 7,300 employees, the A&D group will have 70,000, of which Helmut Gierse is the president. Tony Affuso, UGS chairman, plans to stay on.

Siemens boasts that it becomes the first in the world to provide all the software and the hardware for creating production facilities. By "hardware" they don't mean computers; they mean the physical plant, such as entire automobile factories and chemical plants.

Comments

[John]

I'm interested to see how large corporate users of UG (GE for example), that compete with Siemens, will react to this information.

[chris]

Get out your calculator and try that again Brian. The Siemens deal includes assumption of $1B in debt, but the original deal that the 3 PE companies struck was 50% financed by debt, so essentially the debt was passed through. They invested a little more that $1B in cash and will get back more that $2B (plus whatever they made as dividends during ownership) so they actually cleared more than 100%.

[Brian]

Not so fast, my friend.

That deal includes taking on $1B in debt, and the sponsors put in more cash at a later date, as I recall. They are in for about $2.4B, give or take. If this deal is net of the debt, the financial sponsors actually lost money on this one.