With its acquisition of U.S. software producer UGS Corp., of Plano, Texas, the Siemens Automation and Drives (A&D) Group will expand its product spectrum in automation technology to include industrial software for planning, design and simulation in Product Lifecycle Management (PLM). As a trendsetter 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 US$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 move would give SV the necessary financial resources and greater entrepreneurial flexibility for ensuring further sustainable and profitable growth.

UGS generated just under US$1.2 billion in sales and an EBITDA of US$241 million in fiscal 2005. The company is one of the world's market leaders for Product Lifecycle Management (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 US$13 billion and growth rates between 7 and 9 percent. 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 is thus 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. 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," said Klaus Kleinfeld, President and CEO of Siemens AG. A&D and UGS, two world-class companies which have successfully worked together in the past, will join forces and generate substantial growth synergies.

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 ten percent 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 opportunities for its growth," stated Kleinfeld. The expansion of the very successful and profitable, yet 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 will be initiated immediately. Further details have not yet been finalized.

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