Hankering for cash,
agreed to sell its UGS PLM Solutions software unit for $2.05 billion to Bain Capital, Silver Lake Partners and Warburg Pincus.
The all-cash deal, expected to close within 90 days, will help EDS reduce debt. The computer outsourcing outfit has said it wants to have no net debt by the end of 2004. The deal comes as EDS struggles with a declining order book and a number of high-profile deals, such as its Navy contract, that have failed to live up to expectations.
The company said the agreement reflected the strong demand for the unit, which offers product data management, collaboration and design software applications and services.
"The transaction is another tangible step in the strategic plan we laid out for investors in June 2003," said CEO Mike Jordan. "We said our ongoing focus will be strengthening our core information technology and business process outsourcing operations and our balance sheet. This transaction supports both priorities and further enhances our competitive position."
Finance chief Bob Swan said the decision to sell the unit reflected the significant interest the divestiture generated, as did the purchase price, which is about 2.3 times annual revenue. In 2003, UGS PLM Solutions generated $897 million in revenue and $104 million in net income.
"The purchase price clearly shows the strength and potential of this business," Swan said. "The private equity group is receiving an excellent operation, while we bolster our competitive position."
On Monday, EDS rose 62 cents to $19.77.