Siemens AG has submitted a takeover bid to the shareholders of IBS AG, a maker of industrial quality management software, in a strategic move intended to build out Siemens' manufacturing execution system business.
The offer of €5.00 per share, made earlier this week, has already been accepted by the Schroeder family, who collectively hold 43% of IBS shares, according to information on IBS's Web site. While it is unclear whether the tender offer was unsolicited, the IBS board of directors and supervisory board have indicated that the planned takeover by Siemens — for about €35 million — is "essentially positive."
If German antitrust authorities approve the deal, IBS will become part of Siemens' manufacturing execution systems (MES) business, which falls within the Automation and Drives Group.
"Not only will IBS shareholders profit from an attractive premium, [but] also our customers will benefit from integrated solutions and strong partners," said Anton S. Huber, a member of the executive management team at Siemens Automation and Drives, in a statement. "The product portfolio of IBS will supplement our MES business."
Siemens has been building out its MES product portfolio, called SIMATIC IT, for the past few years. Late last year, the company announced the creation of the SIMATIC IT Business Unit, where the company's acquisitions of IndX, a maker of manufacturing intelligence software, and the Orsi Group, an Italian MES vendor, reside. Siemens has mapped out an integration strategy around a common framework that is built to seamlessly integrate functional components. IBS would add key quality and compliance capabilities to the mix.
IBS, like Siemens, has grown through acquisition over the years. IBS reported total sales of €19.7 million for fiscal 2006. The company has built a strong product set that includes production quality management tools, such as statistical process control and corrective and preventative action (CAPA) applications.
The proposed acquisition as a good fit for both parties, according to Julie Fraser, principal and industry analyst at research firm Industry Directions, who is familiar with both companies. Siemens' MES production suite is focused on guiding processes, collecting data, and trading information with ERP systems, Fraser said. Recipe management is also covered. "They have formulation and execution, so the next logical step really is quality control and making sure that you can enforce the processes you've designed through both R&D and MES capabilities," Fraser said in an interview with Managing Automation . "So, from my perspective this is a good, logical addition" for Siemens.
In a recent Industry Directions report called, "Metrics that Matter: Uncovering KPIs that Justify Operational Improvements," quality was the number-one issue of concern for companies incorporating an MES system. To date, most MES vendors have partnered to gain SPC and CAPA capabilities. The IBS acquisition would enable Siemens to integrate that functionality directly into its offering.
Siemens' offer represents a premium of 54% on IBS's closing price on the Xetra trading platform last week. "I find more and more that even fairly successful companies are often interested when the big boys come to call," Fraser said.
Siemens' offer will be contingent on the fulfillment of a number of customary terms and conditions, including the assumption by Siemens of at least 75% of the capital stock of IBS AG, according to a company statement. More details of the terms will be announced in the bid, which is expected to be made public at the end of this month. Siemens and IBS officials did not return calls for comment today.