News: Electronic Data Systems (EDS) to Sell UGS Division for $2.05 Billion

16 March 2004
A private equity group of Bain Capital, Silver Lake Partners and Warburg Pincus today announced it has reached a definitive agreement with EDS to purchase UGS PLM Solutions, EDS’ product lifecycle management subsidiary, for $2.05 billion in cash. The transaction, in which each private equity firm is an equal investor, 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. “Most importantly, the transaction further strengthens our industry-leading client care model. 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.”

UGS PLM Solutions is a global leader in PLM software and related services, with approximately 42,000 clients worldwide. In 2003, UGS PLM Solutions reported revenue of US$897 million and net income of US$104 million.№ In the second half of 2003, the business achieved 14 percent (8 percent in constant currency) year-over-year revenue growth.

“This transaction is part of the strategic plan we outlined last year to focus on our core information technology and business process outsourcing businesses,” said EDS Chief Financial Officer Bob Swan. “The divestiture significantly enhances our competitive position while strengthening our balance sheet.”

The transaction is expected to close within 90 days, pending customary closing conditions.

Leadership In a Growing Market

UGS PLM Solutions delivers integrated technology and services supporting the entire lifecycle of a product -- from concept and development to distribution and delivery. The global market for PLM software and services is expected to grow by a compound annual growth rate of 8 percent through 2008 to more than US$14.5 billion, according to CIMdata.

"We are excited to partner with Silver Lake and Warburg Pincus to acquire the technology and market leader in the PLM business, and to support a talented team as they further build what is already a successful global enterprise," said Andrew Balson, a Managing Director at Bain Capital. "UGS PLM Solutions has earned its leadership position by developing mission critical software and integrated services for leading companies in design intensive industries. We are committed to investing to grow the business by continually increasing the value that the company's technologies deliver to customers."

"UGS PLM Solutions is the undisputed market share and technology leader in the rapidly expanding PLM industry. We like investing in proven winners and look forward to working with CEO Tony Affuso to grow this outstanding software franchise," said David Roux, founding principal of Silver Lake Partners.

“We look for these types of opportunities -- to invest in market leading businesses that create sustainable value. And, from its established position of global strength in the core design and engineering software market, UGS PLM Solutions is at the forefront of innovative software vendors that are creating real business value,” said Joseph P. Landy, co-president of Warburg Pincus.

Through 2008, CIMdata expects the product data management and collaboration segment of the PLM market, which UGS PLM Solutions leads on the strength of its Teamcenter portfolio, to grow 17 percent, compounded annually, to nearly US$5 billion.

“When complete, the transaction will enable UGS PLM Solutions to operate optimally as an independent software company,” Affuso said. “We look forward to working with our new investment partners and building on our momentum in the PLM space.”

About Bain Capital

Bain Capital is a global private investment firm that manages several pools of capital including private equity, venture capital, public equity and high-yield and mezzanine debt with more than $17 billion in assets under management. Since its inception in 1984, the firm has made private equity investments in over 225 companies around the world, partnering with strong management teams to grow businesses and create operating value. Bain Capital has deep experience in a variety of industries and a team of almost 200 professionals dedicated to investing in and supporting its portfolio companies. A global team of professionals focused on technology sectors has guided investments in nearly 75 software and technology companies, including DoubleClick, Ameritrade, Integrated Circuit Systems, ChipPAC, Therma-Wave, Recruitsoft, and USinternetworking. Headquartered in Boston, Bain Capital has offices in New York, London and Munich.

www.baincapital.com

About Silver Lake Partners

Silver Lake is the leading private equity partnership focused exclusively on large-scale investing in technology. Silver Lake seeks to achieve superior returns by investing with the strategic insight of an experienced industry participant, the operating skill of a world-class manager, and the financial expertise of a disciplined private equity investor. Specifically, Silver Lake's mission is to function as a value-added partner to the management teams of the world's leading technology franchises. Its portfolio companies include technology industry leaders such as Ameritrade, Business Objects, Flextronics, Gartner Group, MCI and Seagate Technology. For more information, please visit www.slpartners.com.

About Warburg Pincus

Warburg Pincus has been a leading private equity investor since 1971. The firm currently has approximately $9 billion under management and $5 billion available for investment in a range of sectors including information and communication technology, business services, energy, financial services and technologies, healthcare and life sciences, media and real estate. The firm has invested approximately $4.8 billion in 140 technology companies, including BEA Systems (Nasdaq: BEAS), VERITAS Software (Nasdaq: VRTS), Avaya (NYSE: AV) and Manugistics Group (Nasdaq: MANU). Warburg Pincus is an experienced partner to entrepreneurs seeking to create and build durable companies with sustainable value. The firm has an active portfolio of about 125 companies. For more information, please visit www.warburgpincus.com.

About UGS PLM Solutions

UGS PLM Solutions, a leader in product data management, collaboration and product design software and services with 42,000 clients and more than 2.8 million seats of technology operating in the market, is the product lifecycle management (PLM) subsidiary of EDS. The company works collaboratively with its clients to create solutions enabling them to transform their process of innovation and thus begin to capture the promise of PLM. The integration of the former operations of companies including Structural Dynamics Research Corporation (SDRC), Engineering Animation Inc. (EAI) and UGS, UGS PLM Solutions has created some of the leading design, collaboration and product data management technologies that ultimately formed the foundation of the PLM industry. Today, the company is a family of one, building on three decades of leadership in continuing to be a pioneer in PLM. For more information on UGS PLM Solutions products and services, visit www.ugsplm.com or www.eds.com.

About EDS

EDS, the world’s most experienced outsourcing services company, delivers superior returns to clients through its cost-effective, high-value services model. EDS’ core portfolio comprises information-technology and business process outsourcing services, as well as information-technology transformation services. EDS’ two complementary, subsidiary businesses are A.T. 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.