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Acquisitions and mergers

EDS Abandons IPO Plans, Seeks Private Sale for UGS-PLM Group

Strategic Insights

— 1 min read

EDS has halted plans for the initial public offering of its UGS-PLM software group, a move that could have raised up to $1.2 billion, and is now looking to sell the business privately. This decision comes as the company continues to recover from a series of strategic errors that led to a significant decline in revenues and profits in 2002. EDS CEO Michael Jordan has stated that the sale of the UGS-PLM group is crucial to the company's restructuring plans, which include 5,200 job cuts and the relocation of work to lower-cost offshore sites.

Key Takeaways:

  • EDS has abandoned plans for an initial public offering (IPO) of its UGS-PLM software group, expected to be one of the year's biggest IPOs in the US.
  • The company is now seeking a private sale of the UGS-PLM group, with the goal of raising up to $1.2 billion in capital.
  • EDS is struggling to recover from a series of strategic errors that led to a decline in revenues and profits in 2002, with a 50% drop in new business in the fourth quarter of 2003.
  • CEO Michael Jordan has stated that the successful divestiture of the UGS-PLM group is key to the company's restructuring plans.
  • EDS sold two smaller businesses for approximately $541 million in 2003 and late 2002.
  • The company aims to complete most of its divestitures with the sale of the UGS-PLM group.
  • EDS has received "solid interest" in a private sale, with a decision expected within a month.
  • A private sale could provide a better deal for EDS due to the costs associated with an IPO.

Statistics:

  • Up to 5,200 jobs to be cut as part of EDS' restructuring plan.
  • 50% drop in new business in the fourth quarter of 2003.
  • UGS-PLM software group sales of $866 million in 2003.
  • Proposed valuation of 1.5 times revenues for the UGS-PLM group.
  • Expected sale price of up to $1.2 billion for the UGS-PLM group.
  • 50% drop in revenues and profits in late 2002.

Sources:

  • No date, "EDS Abandons IPO Plans, Seeks Private Sale for UGS-PLM Group", TechCrunch, Tom Foremski
  • December 29, 2004, "EDS Shakes Up PLM Team", Tom Foremski, (specific date not provided in original text)

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