As a pioneer in industrial automation, A&D will now be able to offer its customers worldwide solutions for creating digital factories. The purchase price for the deal is around $3.5 billion including debt. The transaction is subject to approval by the relevant authorities.

In addition, Siemens AG plans an IPO of its automotive supply business Siemens VDO Automotive (SV), in which Siemens would hold a majority stake. This would provide SV the necessary financial resources and greater entrepreneurial flexibility for ensuring further sustainable and profitable growth.

UGS generated just under $1.2 billion in sales and an EBITDA of $241 million in fiscal 2005. The company is one of the world's market leaders for PLM, a critical part of industrial manufacturing that allows the digital control of product development and manufacture.

The market for PLM software and services has an annual volume of around $13 billion and growth rates between 7 and 9 per cent. Combining the PLM solutions of UGS with Siemens' automation technology will enable Siemens to provide integrated offerings covering the entire product life cycle for the first time.

Siemens thus becomes the first company in the world able to offer its customers fully integrated solutions for creating digital factories that will give the customers decisive competitive advantages through reduced costs and improved quality assurance.

"With the acquisition of UGS, we can combine its competence in the sector of digital factories with our leading know-how in industrial automation," said Klaus Kleinfeld, president and CEO of Siemens AG. "This combination makes our customers' processes faster, better and more cost efficient. With this unique combination, we will underscore our position as a trendsetter in automation systems and propel this business into a new dimension,"

Funding through IPO
At the same time, Siemens plans an initial public offering (IPO) of SV. With sales of €10 billion in the past fiscal year, SV is one of the largest and most successful Siemens Groups.

Since being established at Siemens more than 20 years ago, the Automotive Group has rapidly grown an average of 10 per cent a year through organic growth and acquisitions. SV met its margin target set as part of Operation 2003 and has continued to improve its profitability in a challenging competitive environment.

"An IPO would give SV greater flexibility, further reinforce its strong position in the market for automotive electronics, and actively tap the market consolidation pportunities for its growth," stated Kleinfeld.

The expansion of the profitable, though capital-intensive business of SV has long been the subject of intensive discussion at Siemens. "We are convinced that a listing of SV would be a highly attractive option for continuing to drive the further expansion of SV. This would write a new chapter in the SV success story and open up enormous future opportunities for the company and its employees," said Kleinfeld. Preparations for the IPO are being initiated immediately.

The Siemens Automation and Drives Group (A&D), Nuremberg, Germany, is the leading manufacturer in this field worldwide. Products supplied by A&D include standard products for the manufacturing and process industries and for the electrical installation industry as well as system solutions, for example for machine tools, and solutions for whole industries such as the automation of entire automobile factories or chemical plants.

Supplementing this range of products and services, A&D also offers software for linking production and management (horizontal and vertical IT integration) and for optimising production processes. In fiscal year 2006 (to September 30) A&D earned a group profit (based on US GAAP) of €1.572 billion on sales of €12.848 billion, and posted orders of €14,108 billion.

Siemens VDO Automotive, a part of Siemens AG, is one of the world's leading suppliers of electronics and mechatronics for the automotive industry. With its products, it enables individual mobility and the efficient transportation of goods by road in modern societies.

As development partner of the automotive industry, the company manufactures automotive electronics and mechatronics for reducing emissions, enhancing safety and driving comfort, and keeping drivers informed and in touch with the outside world. Siemens VDO generated sales of over €10 billion in fiscal year 2006 (to September 30) and group profit of €669 million (based on US GAAP).