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Siemens AG will buy UGS, plans IPO of auto unit

UPDATED: 1/25/2007 1:30 P.M.

German conglomerate Siemens AG said today that it will buy a major U.S. producer of industrial software and take its VDO automotive parts business public for the first time.

The acquisition of UGS Corp., of Plano, Texas, will expand Siemens' automation technology offerings to include software for product planning, design and manufacturing simulation.

Marrying UGS' software with Siemens' automation technology will enable Siemens, for the first time, to offer software and services covering the entire product life cycle.

The $3.5 billion deal is subject to approval by regulatory authorities.

General Motors, UGS' largest automotive customer, had no immediate comment on the deal. Dan Jankowski, a GM spokesman, said the automaker was not yet familiar with the terms of the deal.

If the deal is complete, UGS would be absorbed into Siemens' automation and drives group, not the automotive unit. The automation unit works with manufacturers to automate their plants and provides software for linking production and management. The automation unit employs 60,800 people worldwide.

Also today, Siemens said it plans an initial public stock offering of its VDO automotive group. Siemens AG will retain a majority stake in the group, making up to 49 percent of stock available for public purchase, a company spokesman said.

A listing of Siemens VDO Automotive "would be a highly attractive option for continuing to drive the further expansion" of VDO, Siemens AG CEO Klaus Kleinfeld said in a statement.

Siemens VDO Automotive reported sales of $13 billion in the fiscal year that ended Sept. 30. The unit ranks No. 11 on the Automotive News list of the top 100 global suppliers, with original-equipment automotive parts sales of $11.30 billion in 2005.

Among automotive electronics suppliers, Siemens VDO ranks among the world's top three, generating about 50 percent of total sales from its core electronic/electrical systems business.

Reuters contributed to this report.

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