US trio backs $2.05bn software buyout

Bain Capital, Warburg Pincus and Silver Lake Partners will buy a production software division of EDS in what is described as the largest-ever technology private equity deal.

Bain Capital, Warburg Pincus and Silver Lake Partners yesterday announced a $2.05 billion (€1.67 billion) agreement to buy UGS PLM Solutions, a division of publicly traded EDS, the systems services giant.


The three firms have contributed equal amounts of capital to the deal, according to a press release.


UGS, based in Texas, is a ‘product lifecycle management’ software maker. The company delivers integrated technology and services supporting the entire lifecycle of a product from concept and development through to distribution and delivery. UGS has around 42,000 clients around the world. In 2003, the company reported revenue of $897 million and net income of $104 million. In the second half of 2003, the firm achieved 14 percent year-on-year revenue growth.


UGS president and chief executive officer Tony Affuso will continue to lead the company.


The global market for PLM services is expected to grow by a compound annual growth rate of eight percent by 2008 and be worth more than $14.5 billion.


“UGS PLM Solutions has earned its leadership position by developing mission critical software and integrated services for leading companies in design intensive industries,” said Andrew Balson, managing director of Bain Capital, in the release. “We are committed to investing to grow the business by continually increasing the value that the company’s technologies deliver to customers.”


Boston-based Bain Capital, which has more than $17 billion under management, has invested in over 225 companies since 1984, around 75 in software and technology companies, while Warburg Pincus has invested approximately $4.8 billion in 140 technology companies including BEA Systems, VERITAS Software and Avaya.


Silver Lake is focused exclusively on large-scale investments in technology and its portfolio companies include Ameritrade, Flextronics and MCI. The Menlo Park, California-based firm is known for leading the hugely successful buyout of Seagate Technologies, a complicated transaction completed in 2000 and valued at $1.7 billion. Silver Lake and its co-investors have partially Seagate now that it is publicly traded.