EDS today announced it has reached a definitive agreement to sell its UGS PLM Solutions unit for $2.05 billion in cash to a group of three private equity firms: Bain Capital, Silver Lake Partners and Warburg Pincus.
UGS PLM Solutions is a leading provider of product data management, collaboration and design software applications and services. The transaction is expected to close within 90 days, pending customary closing conditions.
"The transaction is another tangible step in the strategic plan we laid out for investors in June 2003," said EDS chairman and CEO Mike Jordan, who was recruited by the EDS board in March 2003 to lead the company.
"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."
Upon closing the transaction, EDS expects to be closer to its announced goal of zero net debt (total debt minus cash and marketable securities on hand) by the end of 2004.
The decision to divest UGS PLM Solutions through an IPO or private sale was announced in October 2003, after EDS completed a comprehensive assessment of its business portfolio against its strategic plan built on leveraging IT and BPO growth opportunities.
"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 non-core, non-strategic operation, while enabling UGS PLM Solutions to further enhance its future growth," said EDS CFO Bob Swan.
"The purchase price clearly shows the strength and potential of this business. The private equity group is receiving an excellent operation, while we bolster our competitive position."
Swan said the decision to divest the full unit reflected the significant interest the divestiture generated -- and the purchase price, which is about 2.3 times annual revenue.
In 2003, UGS PLM Solutions generated $897 million in revenue and $104 million in net income.^1 EDS will provide further detail and updates to its 2004 forecasts on its first quarter earnings call.
UGS PLM Solutions has approximately 5 000 employees.
Evercore Partners acted as financial advisor to EDS in this transaction.
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EDS, the world`s most experienced outsourcing services company, delivers superior returns to clients through its cost-effective, high-value services model. EDS`s core portfolio comprises information-technology and business process outsourcing services, as well as information technology transformation services. EDS`s two complementary, subsidiary businesses are AT Kearney, one of the world`s leading high-value management consultancies, and UGS PLM Solutions, a leader in product data management, collaboration and product design software. With 2003 revenue of $21.5 billion, EDS is ranked 80th on the Fortune 500. The company`s stock is traded on the New York (NYSE: EDS) and London stock exchanges. Learn more at eds.com.
^1 UGS PLM Solutions` 2003 revenue and net income at actual exchange rates.
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