Siemens buys software company UGS for $3.5B

Purchase of the product lifecycle management vendor marks change in direction for Siemens

German industrial giant Siemens plans to buy PLM (product lifecycle management) software developer UGS for $3.5 billion, allowing it to offer customers all-digital manufacturing systems from the drawing board to the factory gate.

The move marks a further change in strategic direction for Siemens, which is in the throes of a major reorganization. On Jan. 15 it announced plans to regroup its IT activities together in a new division, Siemens IT Solutions and Services, to concentrate on outsourcing. And over the last two years it has moved away from the telecommunications market, selling its mobile phone handset manufacturing business to BenQ Corp. in 2005 and putting its telecommunications network equipment activities into a joint venture with Nokia last June.

Siemens plans to incorporate UGS, of Plano, Texas, into its Siemens Automation and Drives Group, which manufactures automation technology for factories. This will allow it to create "digital factories" for its customers, allowing them to control production quality and cost, Siemens said.

In its fiscal year 2005, UGS reported sales of almost $1.2 billion in a market for PLM tools that Siemens estimates is worth around $13 billion.

At the same time, Siemens announced plans for an initial public offering of part of another manufacturing unit, Siemens VDO Automotive. The company intends to retain a majority stake in the unit, which manufactures electronic and electromechanical components for the automotive industry.