Siemens, Investor Group Form $545 Million Joint Venture
The Gores Group will get a majority stake in the new venture, which will combine Siemens technology with other Gores holdings.
Siemens announced Tuesday that it will form a joint venture with The Gores Group, a private equity investor, to grow Siemens' Enterprise Communications division.
The two will jointly invest about $545 million in the deal, and Gores will invest about $273 million to get a 51% stake in the venture. The investment group already owns network equipment and security provider Enterasys Networks, as well as a call center software company, SER Solutions. Siemens is Europe's largest engineering firm, operating in 190 countries with six major business divisions including communications, medical, and transportation.
Gores will combine these companies with Siemens Enterprise, or SEN, to offer enterprise customers a "more complete enterprise networking and communications offering," said Gores Group CEO Alec Gores in a statement.
"We are continuing to intensify the focus of our portfolio on the three sectors, which are energy, industry, and health care," Siemens CFO Joe Kaeser said in a statement. "In Gores, we have found an extremely experienced technology and telecommunications partner who strengthens the business. We are confident that this will benefit the employees and customers in the long term."
Additionally, the investments were made to launch new SEN communication products, as well as acquire other technology platforms.
On the operational level, Gores will drive the business. Products will retain the Siemens brand name, while Siemens licenses and patents will be transferred to the joint venture. Certain production facilities also will be transferred to the joint venture.
The joint venture deal is expected to be closed by the end of Siemens' fiscal year 2008, pending regulatory approval, the company said. The SEN division, which was spun off from the parent company almost two years ago, had revenue of about $5.1 billion in 2007.