Broadband Developments

BroadDev has blogged about this since May when it was being kicked around that Siemens was selling it’s enterprise business.  BroadDev’s Alex Lewis comments on his blog post earlier by saying ..” Siemens has been on the sale block for nearly a year and no one’s biting. Wonder why? I don’t. A stagnant division in a crowded market with significant barriers to entry.”

Now Gores Group has completed its acquisition of a 51% stake in Siemens Enterprise Communications from Siemens AG, which will retain the other 49 percent. The deal is structured as a joint venture, with the companies committing to invest at least €350 million into SEC, which provides unified communications, contact centers and secure networks.

So, what does all this mean? Nothing for the immediate future. If you’re a Siemen’s customer, you’re probably in Europe and asleep by now, but you’re also happy that the Gores group will keep SEN mostly intact and keep support for current products on the same roadmap. They’ll be moving to a mostly software platform in voice and UC, a better late than never move. All in all, not much changes. Siemens will remain a small player in UC with a great story and it’s likely any foothold in voice will be eroded by Cisco, Microsoft and others in the UC wave.

More Info on the deal:

Siemens AG and The Gores Group, a U.S.-based private equity firm both known for their operating expertise, have completed a joint venture transaction in which Gores acquired a 51 percent stake in Siemens Enterprise Communications. Siemens will maintain a 49 percent ownership interest in the joint venture. The joint venture will start operations on October 1, 2008.

Alec Gores, founder and chairman of The Gores Group, stated, “We are very excited about the addition of Siemens Enterprise Communications to our portfolio of companies. We think that Siemens Enterprise Communications will help expand our presence in the enterprise networking and communications space and we look forward to rapidly growing the joint venture.”

The Gores Group, which is focused to growing businesses, has extensive management expertise in the technology and telecommunications area and establishes the acquired companies as autonomous entities within their portfolio.

“The new partner will provide the leadership and experience to help grow the Siemens Enterprise Communications business and further consolidate the industry, which will benefit customers, employees and shareholders in the long term,” added Joe Kaeser, Siemens’ Chief Financial Officer.

As stated when the transaction was announced, Gores and Siemens plan to invest at least €350 million in the joint venture - not including expenditures for research and development and other expenditures as part of the ordinary course of business. The investments will be made in order to launch innovative Siemens Enterprise Communications products on the market, acquire other technology platforms to capitalize on the powerful Siemens Enterprise Communications distribution organization and further drive the expansion and transition of the business from a hardware supplier to a software and service provider.

Siemens Enterprise Communications’ innovative new products like the OpenScape UC Server will remain an integral part of the portfolio and it will continue to offer its OpenPath migration strategies for existing product families in order to ensure a smooth transition to the new Unified Communications solutions. Support and upgrades for Siemens Enterprise Communications products, especially HiPath 3000 and HiPath 4000, will also be continued.

In the coming months, Siemens Enterprise Communications business will be merged operationally with two of Gores’ portfolio companies – Enterasys, a network equipment and security solutions provider and SER Solutions, a call center software company. The combination of these three entities will lead to a more complete enterprise networking and communications offering. In the near term, Siemens Enterprise Communications will be led by Chairman and interim CEO Mark Stone.

“With the closing and the creation of this new entity, we believe the stage is set for this company to become one of the top global players in unified communications with products, services and people that are second to none in the industry,” said Mr. Stone. “Furthermore, we believe the time is right for this new company to experience phenomenal growth, both organically and through acquisitions, and position itself as a major force in the market.”

About The Gores Group, LLC

The Gores Group, LLC, founded in 1987, is a private equity firm focused on acquiring controlling interests in businesses which can benefit from the firm’s operating experience and flexible capital base. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. The Gores Group maintains offices in Los Angeles, Boulder and London. For more information, please visit www.gores.com.

About Siemens Enterprise Communications

Siemens Enterprise Communications is a joint venture between the private equity firm The Gores Group, a leading private equity firm, and Siemens AG. The joint venture incorporates Siemens Enterprise Communications GmbH & Co. KG its worldwide affiliates and the businesses of Enterasys Networks and SER Solutions, creating a new leader in enterprise communications - strong in unified communications, contact centers and secure networks. More than 14,000 employees worldwide follow an Open Communications approach, providing enterprise communications and data networking solutions for enterprises of all sizes. This enables business processes to be more productive, faster and more secure within any network or information technology infrastructure. In fiscal 2007 Siemens Enterprise Communications generated revenues of approximately 3.2 billion Euros. For more information about Siemens Enterprise Communications, please visit www.siemens.com/open.

About Siemens AG

Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. The company has around 400,000 employees (in continuing operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of solutions for individual requirements. For over 160 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. In fiscal 2007, Siemens had revenue of €72.4 billion and income from continuing operations of €3.9 billion (IFRS). Further information is available on the Internet at: www.siemens.com.