Manufacturing Executive - January/February 2009 - (Page 27) O n Jan. 25, 2007, Siemens AG President and CEO Klaus Kleinfeld addressed shareholders during the company’s annual financial meeting. He opened his remarks by outlining the grim details of a bribery scandal that would send shockwaves throughout the organisation and eventually result in his departure. But perhaps more surprising was the announcement that Siemens would acquire UGS, the Dallas-based maker of CAD/CAM and product lifecycle management software. Word of the scandal and the planned acquisition spread around the globe as fast as the World Wide Web could carry it, and when UGS employees heard the juxtaposition of these two news items, their initial excitement about the impending deal turned to uncertainty. “We were all, like, you’ve got to be kidding,” says a UGS insider. “The timing of the announce- ments made many of us feel like the deal might not come together.” The $3.5 billion deal did indeed come together in May 2007, but not without much speculation and critical commentary from industry analysts. Criticism arose not because of the scandal, but because the acquisition strategy seemed implausible to many people, both inside and outside of the company. Everyone knew that UGS, now called Siemens PLM Software — which before the acquisition was owned by three private equity firms — was ready either to go public or be purchased. But when news surfaced internally that it would be an acquisition by a German company with a name starting with “S,” everyone assumed it would be SAP, a software company. Why was Siemens, with a core competency in industrial hardware, buying UGS, a software company with more than $1 billion in debt and a product line that appeared not to fit anywhere into the Siemens portfolio? And how would the German MERG WOR ER KING ? IS THE Siemens Nei l SPECIAL REPORT + UGS: MO R UGS E THA SOR , SIEM N A Y E BEH BED T ENS A AR AF FAC IND T HE PL PPEAR TER IT S TOR HE M M PR S T ERG Y— OVI O HA BOLD DE AC VE IS S ER TILL — TH R. BU SUC QUIS CE IT T E IN I TS CONC THE B SSFU ION OF EAR L A E LY S PT OF SIC PR LY ABE TAG A By Ste ES. DIGIT MISE pha AL nie Manufacturing JAN/FEB-09 Executive 27
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