UGS PLM Solutions to go it alone

EDS is to sell UGS PLM Solutions, its profitable product lifecycle management (PLM) systems business unit, to a team of three private investment companies for $2.04bn. It’s believed to be the biggest private equity investment ever made in a technology company. The buyers – Bain Capital, Silver Lake Partners and Warburg Pincus – are expected to complete on the deal in June. EDS put the firm up for sale in October of last year as part of a plan to return to core competence and improve its balance sheet. UGS claims 42,000 clients and more than 2.8 million seats of its various technologies around the world. Analysts see the sale and acquisition as positive news all round. Ken Amann, research director at CIMdata, for example, says: “As a separate entity UGS PLM Solutions will be able to act independently and as a software product [and] solution-focused organisation. “The new company will have visibility they lacked while a part of EDS and will stand on its own in the PLM industry; both in financial performance and other aspects of its operation.” For example, prior to its acquisition by EDS, PLM developer SDRC, as was (which merged with UGS and Engineering Animation), had one of the PLM industry’s largest partner bases. The expectation is that many will return to the fold no longer concerned about ‘issues’ with other EDS business units. Amann: “We expect UGS PLM Solutions to quickly and aggressively expand and strengthen its partner program and distribution channels. Further, we believe that systems integrators such as Accenture [and] Cap Gemini Ernst and Young will be more aggressive in using [UGS’s] Teamcenter, NX and E-Factory product suites to develop and deliver PLM solutions.” Meanwhile, EDS and UGS PLM Solutions will continue to maintain a relationship, not least because the former has substantial services and outsourcing revenues based on the latter’s products. “This agreement validates UGS PLM Solutions’ strategy and leadership, while positioning the company for continued growth,” says Tony Affuso, president and CEO of UGS PLM Solutions. “We are delighted to have the opportunity to partner with investors who have significant software experience and a growth-oriented long term approach to building value.”