Computer services giant EDS said on Wednesday that it was spending more than $1bn to buy two companies and create a new business unit.
EDS said it had reached an agreement to buy the whole of Structural Dynamics Research (SDR) for $950m, and that it intends to purchase the 14 per cent of Unigraphics Solutions (UGS) that it doesn't already own for $170m.
The two companies will be combined to make EDS' fifth line of business. The unit, which will keep the UGS acronym, will supply digitised product lifecycle management (PLM) software and services.
In a market worth $18bn this year, PLM products give major businesses the wherewithal to design complex products ranging from jet engines to household appliances. SDR had revenues of $452m in 2000, while UGS' revenues totalled $526m.
Because of a certain degree of overlap, combined revenues will be $700m in the next 12 months, but will grow at up to 20 per cent over the following five years.
EDS recently reported first-quarter revenues of $5bn with 13 per cent growth from its existing computer services, ecommerce design, data processing, and A T Kearney management consulting businesses.
The deal is expected to close at the end of September.
"In the last 24 months we have seen the beginning of a networked-based revolution in the way products are designed, developed and manufactured. Unigraphics has given us a window on this change," said Dick Brown, chief executive at EDS.
In a separate move, EDS has sold Canadian subsidiary EDS Innovations, a technology infrastructure and deployment division, to a Canadian private investment group led by current EDS Innovations president, Hubert Kelly. Financial details were not disclosed.
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