PTC continually enlarges its footprint in the digital enterprise domain. There was its expansion a few years ago into Internet of Things with acquisition of ThingWorx and Kepware. Those brought a relationship with Rockwell Automation—and I noticed its stand at Automation Fair this month was continually busy. Now an extension into field service management related to its product lifecycle management (PLM) portfolio.
This is an interesting acquisition. Management believes it can bring all these acquisitions together to get the jigsaw puzzle pieces to interlock.
- Acquisition expected to strengthen service capabilities of PTC’s closed-loop PLM portfolio
- PTC’s manufacturing customers rely on field service management for product performance, customer satisfaction, and profitability expansion
- Strong synergies between PTC and ServiceMax’s manufacturing customers and product portfolios
- Transaction expected to be accretive to PTC’s SaaS ARR and cash flow in FY’23
PTC announced that it has signed a definitive agreement to acquire ServiceMax for approximately $1.46 billion in cash on a debt-free, cash-free basis from an entity majority owned by Silver Lake. ServiceMax is a recognized leader in cloud-native, product-centric field service management (FSM) software. The acquisition is expected to strengthen PTC’s closed-loop product lifecycle management (PLM) offerings by extending the digital thread of product information into downstream enterprise asset management (EAM) and FSM capabilities. Subject to the satisfaction of regulatory approval and other applicable closing conditions, the transaction is expected to close in early January 2023.
Partners since 2015, PTC and ServiceMax both support manufacturers of complex, highly configured products for the medical device, industrial products, aerospace, and related verticals. These manufacturers view field service as a strategic part of their businesses to maintain product performance, extend their products’ lifecycles, increase customer satisfaction, drive revenue growth, and expand profitability.
- The purchase price will be funded in two stages, with $808 million paid at closing and $650 million paid in October 2023. The transaction will be funded with cash on hand, borrowings under PTC’s existing credit facility, and a new $500 million committed term loan.
- ServiceMax is expected to contribute approximately $160 million in ARR for PTC’s Q2’23.
- The transaction is expected to be accretive to PTC’s FY’23 cash flow from operations, free cash flow, and adjusted free cash flow targets.