The deal between UGS and Tecnomatix, which have been strategic partners for more than two years, is pending approvals from regulators and shareholders. Tecnomatix's founders and other significant shareholders owning approximately 13% of the outstanding shares have committed to vote in favor of the acquisition and the deal has received the support of Tecnomatix's board of directors, according to a Tecnomatix statement. The deal should be finalized by the end of the first quarter of this year.
In an interview, Al Hufstetler, vice president, business strategy & marketing for UGS' E-factory product line, said the acquisition of Tecnomatix by UGS, its fourth acquisition since May 2004, is aimed at capitalizing on a high-growth segment of the PLM market. "UGS is a traditional supplier of PLM technology. Tecnomatix has 20 plus years of experience [in manufacturing process management]. We have seen an exponential growth in this area," Hufstetler said. "We have had a lot of growth at UGS partially because of our partnership with Tecnomatix. So we felt Tecnomatix is a strategic part of our strategy and offering." About 5,000 companies primarily in the electronics, automotive and aerospace industries use Tecnomatix products, which include its flagship eMPower MPM line.
Tecnomatix's revenue for the nine months ended September 30, 2004, was $73.5 million, compared to $61.1 million for the same period of 2003, an increase of 20%. Net income for the nine months was $1.3 million, compared to a net loss of $5.9 million.
Tony Affuso, chairman, CEO and president of UGS said in a statement: "Integrating Tecnomatix into UGS is a natural but significant step in our digital manufacturing strategy and should accelerate our ability to deliver this premier software on behalf of UGS and Tecnomatix customers."
Since the deal is so new, said Hufstetler, UGS has not yet made any decisions about the future structure of Tecnomatix, how it will be branded, what will happen to existing Tecnomatix partnerships -- such as its existing partnership with SAP -- or how it will be finally integrated with UGS' products. However, Hufstetler anticipates that the integration will be relatively easy, given the history between the two companies. "We have worked very closely with them for two years," he said. "We have trained a lot of our sales folks on Tecnomatix technology. We already had the honeymoon. They know a lot about us. We know about them. I can't imagine not having a good integration with this organization."
Manufacturing customers, said Hufstetler, will also see a more attractive offering from the combined companies. "We see a lot of opportunity in new customer potential because customers are looking for a complete solutions provider. We see it as a more attractive offering. It improves the customer's comfort level when we have a complete offering." The companies intend to offer a fully integrated solution of Tecnomatix MPM to UGS Teamcenter users while continuing to offer Tecnomatix's leading open standalone MPM solution integrated with the PLM environment of choice for its customers. In addition, the companies intend to announce additional technology enhancements later this year.
In 2004, UGS acquired D-Cubed Ltd., a supplier of embedded technology for computer-aided design, manufacturing and engineering analysis application developers, eBreviate e-sourcing technology from AT Kearney and In-Air MRO software from UGS' former parent EDS.