Siemens to Buy UGS for $3.5 Billion, Sources Claim

| About: Siemens AG (SIEGY)

Engineering conglomerate Siemens AG is close to purchasing UGS Corp., a Texan manufacturer of product lifecycle management software, for $3.5 billion including debt, according to the Wall Street Journal. UGS, which is privately owned, had revenues just shy of $1.2 billion and $241 million in operating profit in fiscal 2005. Siemens will also sell a minority stake in VDO Automotive, its automotive-electronics unit, through an IPO. VDO Automotive made €10 billion ($13 billion) in revenue and €669 million in operating profit in the most recent fiscal year ended Sept. 30. These moves are part of an overall restructuring of Siemens begun in January 2005 by CEO Klaus Kleinfeld, who has already made acquisitions worth about $10 billion, including the €4.2 billion purchase of Bayer AG's medical-diagnostics division last June. The restructuring is designed to sharpen the company's focus on three areas: energy and environment, automation in public and private infrastructure, and healthcare. UGS will become part of Siemens's highly profitable factory-automation unit. Siemens is in the midst of a fraud investigation that has temporarily scuppered a telecommunications equipment JV with Nokia.

• Sources: Bloomberg, Wall Street Journal, MarketWatch
• Related commentary: Nokia-Siemens Telecom JV Delayed, But Not Dead, Siemens and IBM Ink Joint IT Deal with German Army, Siemens Fuel Cell Test Results Exceed SECA Requirements
• Potentially impacted stocks and ETFs: Siemens Aktiengesellschaft (SI). Competitors: Alcatel-Lucent (ALU), General Electric Co. (NYSE:GE), Hitachi Ltd. (HIT)

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