Jan
24
Written by:
Brad Holtz
1/24/2007
The London Financial Times announced this afternoon that UGS is about to be acquired by Siemens. http://www.ft.com/cms/s/af89b41c-aba4-11db-a0ed-0000779e2340.html
The deal, which is out of Siemens' automation group, is likely to be designed to leverage the factory automation tools from UGS, not unlike the relationship that Dassault Systemes has with Schneider Electric.
The price clearly reflects that this deal is strategic to Siemens -- the dollar value of their factory automation group dwarfs that of UGS and if the new relationship can bump that number up even a small percentage, the cost of Siemens purchase will seem quite reasonable.
This is one of those deals where everyone wins.
Siemens gets a strategic asset at a discounted price. UGS' financials have not been a strong as its competitors over the past few quarters, depressing its non-strategic valuation. I had predicted a valuation at the time of sale at more than $4b back when UGS was spun out of EDS http://cadwire.net/commentary/?Id=711 The current price is a good deal for Siemens.
UGS finds a good home and owner and a price that reflects a bump over what their current financials might otherwise support. They get that debt burden off their back, they'll have access to more resources, and have lots of opportunites to leverage opportunities with their new owner.
PTC has to love this because if UGS is worth $3.5b with their financials, PTC must be worth at least $2.6b, if not more. That would represent a stock price in excess of $24/share, which is way over what the price is currently, even with today's jump from PTC's good earnings (see tomorrow's CADCAMNet article by Randall Newton at www.cadcamnet.com )
Dassault Systemes has to look at this as an opportunity to target a potential (an unsupported one, I might add) user uncertainty about what UGS will look like under Siemens. "How many different owners does that make now?"
MSC.software and Ansys probably like it too. With all the focus and attention on the factory automation, it is not hard to see an opportunity for MSC.software and Ansys take attention away from UGS' $100M+ analysis business.
And the users should win here too. Siemens will be a friendly owner of UGS and we recommend users view this in a positive light.
All in all, a nice deal. And one I was not expecting.
Congratulations.