EDS Sells Product Lifecycle Management Business

 
 
By Chris Gonsalves  |  Posted 2004-03-14 Email Print this article Print
 
 
 
 
 
 
 

Electronic Data Systems on Sunday said the company will sell its profitable UGS PLM Solutions development subsidiary.

Eager to pay down mounting debt, Electronic Data Systems Corp. will sell a profitable software development subsidiary to three investment firms for more than $2 billion in cash, officials said Sunday. The Plano, Texas services giant said Bain Capital LLC, Silver Lake Partners LP, and Warburg Pincus LLC had agreed to purchase its UGS PLM Solutions unit in a deal expected to close within 90 days. UGS PLM Solutions develops product lifecycle management tools including engineering design and simulation software, product development tools, and integrated pre-production and manufacturing management solutions. The unit has a number of high-profile customers in the automotive, aerospace, defense, and pharmaceutical industries.
The subsidiary, then named EDS PLM Solutions, was formed in September 2001 through the merger of Structural Dynamics Research Corp., Engineering Animation Inc. and UGS. In November 2003, the group changed its name to UGS PLM Solutions.
UGS PLM Solutions "is clearly outside of our core focus," said EDS CFO Bob Swan, in a statement announcing the $2.05 billion deal. "As a result, were essentially divesting a non-core, non-strategic operation." In the second half of 2003, UGS PLM Solutions reported a better than 8 percent increase in year-over-year revenue. EDS officials in February said that theyd seen significant interest from several parties regarding UGS PLM Solutions and that the company planned to either sell the UGS unit outright or take it public with an IPO. At the time, EDS officials said the sale could net "two times the units 2003 revenues of approximately $900 million."
The move to sell UGS PLM Solutions comes less than six months after EDS CEO Michael H. Jordan announced the company was looking to focus on its core outsourcing business and sell some assets to pay down nearly $5 billion in debt. The companys financial position has been under scrutiny of late as troublesome contracts—chiefly EDS huge deal to run the Navy and Marine Corps Intranet (NMCI)—have failed to produce anticipated returns. Click here to read more about the current SEC investigation of EDS. "We said our ongoing focus will be strengthening our core information technology and business process outsourcing operations and our balance sheet," Jordan said in a statement announcing the sale Sunday. "This transaction supports both priorities and further enhances our competitive position." Check out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews, analysis and opinion about productivity and business solutions. Be sure to add our eWEEK.com enterprise applications news feed to your RSS newsreader or My Yahoo page:  
 
 
 
 
 
 
 
 
 
 
 

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