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Product Lifecycle Management (PLM)

Dassault Systèmes to Acquire MatrixOne

2 Mar, 2006 By: Nancy Spurling Johnson

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PLM powerhouse wants an even bigger chunk of the market, says CEO Charles

The manufacturing world awakened yesterday to the announcement that PLM provider Dassault Systèmes was acquiring MatrixOne, developer of collaborative PLM solutions for the value chain, for approximately $408 million in cash. Subject to customary closing conditions, the proposed deal is expected to finalize by the end of June.

Dassault, which develops the ENOVIA and SMARTEAM product lifecycle management solutions, is bringing the MatrixOne offerings into the fold to extend its reach into new markets, the company reports. Typical Dassault PLM users include automotive and aerospace suppliers and ship builders. MatrixOne's customers are largely in the high-tech, consumer products and medical device industries.

In a press conference Thursday morning, Dassault president and CEO Bernard Charles said, "We have not been covering the full spectrum of product lines, and this is what we plan to do with MatrixOne." He emphasized that the companies are "very complementary," and that the acquisition will be "a way to reach new customers."

Charles continued, "We have seen in the past years that the business processes that were used for very complex products in large-scale enterprises were really meaningful to companies where the product itself is not so complex, but the processes that you must follow to coordinate the task are indeed relatively complex, specifically when you have a complex supply chain." MatrixOne technology is directed at those very processes.

Noting that, "we believe the [MatrixOne technology] is best in class to serve this process-modeling market," Charles further explained his company's move. "The rationale is really the fact that, as PLM is not really about business processes from the past but new business processes for global collaborative innovation, we need to continue to scale up our resources in R&D, in best practices services and of course provide a lot of opportunities for MatrixOne to be integrated as part of this comprehensive road map.

"PLM is an open market space; it's growing nicely. We are No. 1, but we want to increase our share, which we are estimating to be at 23% worldwide," Charles said. He referred to figures from research firm Daratech citing a $2.2 billion market last year in collaborative business processes alone -- one segment of PLM -- and a forecasted growth of at least 20% over the next five years. "We want to take a share of that."

More than 850 companies, representing hundreds of thousands of users, work with MatrixOne solutions, including industry leaders such as Alcatel, Celestica, GAP, General Electric, IBM, Intel, Johnson & Johnson, Nokia, Philips, Procter & Gamble, Qualcomm, Sony Ericsson, STMicroelectronics and Toshiba. MatrixOne has 488 employees and 26 offices in North America, Europe and Asia Pacific.

For its most recent fiscal year ended July 2, 2005, MatrixOne reported total revenues of $124.1 million, up from $109.6 million in 2004. Loss for 2005 was $20.3 million, up from a loss of $12.4 million in 2004. Dassault Systèmes, with nearly 6,000 employees worldwide, earned $1.2 billion in revenue in 2005.

Charles indicated that he foresees no changes in management for the companies as a result of the acquisition.