Product Lifecycle Management (PLM)
EDS sells UGS PLM Solutions for $2.05 billion13 Mar, 2004
EDS will sell its UGS PLM Solutions division for $2.05 billion in cash to three private equity firms: Bain Capital, Silver Lake Partners, and Warburg Pincus. The transaction is expected to close within 90 days, pending customary closing conditions. The deal helps EDS move closer to its announced goal of zero net debt by the end of 2004.
According to EDS, the transaction represents the largest private equity investment ever made in a technology company.
This agreement validates UGS PLM Solutions strategy and leadership, while positioning the company for continued growth, said Tony Affuso, president and CEO of UGS PLM Solutions. He adds that the new owners are "investors who have significant software experience and a growth-oriented long term approach to building value. In 2003, UGS PLM Solutions generated $897 million in revenue and $104 million in net income. The division has about 5,000 employees. Its software products include Unigraphics, I-DEAS, Teamcenter, eFactory, and Solid Edge, as well as the Parasolid solid modeling kernel.
EDS bought Unigraphics, then known as McDonnell Douglas Systems Integration, in 1991. In September 2001 EDS acquired I-DEAS developer SDRC (Structural Dynamics Research Corp.) for $950 million and merged it with its Unigraphics subsidiary to form the current UGS PLM Solutions division. Since that merger, UGS PLM Solutions has been working toward merging the Unigraphics and I-DEAS product lines.
"While UGS PLM Solutions is an excellent business and has been a solid contributor to EDS, its business is clearly outside of our core focus. As a result, we're essentially divesting a noncore, nonstrategic operation, while enabling UGS PLM Solutions to further enhance its future growth," said EDS CFO Bob Swan. "The transaction is another tangible step in the strategic plan we laid out for investors in June 2003," said EDS chair and CEO Mike Jordan. "We said our ongoing focus will be strengthening our core information technology and business process outsourcing operations and our balance sheet. This transaction supports both priorities and further enhances our competitive position."