PTC has completed its acquisition of CoCreate Software GmbH, a provider of product development solutions, for approximately $250 million net of cash acquired and excluding transaction fees. CoCreate, based in Sindelfingen, Germany, has 280 employees and more than 5,000 customers globally including Agilent, Canon, Molex, Fujitsu, HP, Liebherr, Matsushita Electric, NEC, Olympus, Phoenix Contact and Seiko Epson.
“The acquisition of CoCreate enables PTC to broaden its customer base, its distribution channel, and its product offering,” said C. Richard Harrison, president and chief executive officer, PTC. “Additionally, we expect the acquisition will be immediately accretive to our non-GAAP operating margins and earnings.”
Customer satisfaction has been a top priority for PTC and we expect CoCreate customers to benefit from this focus. PTC is committed to maintaining, enhancing and further developing all CoCreate products indefinitely, including OneSpace Modeling, OneSpace Drafting, OneSpace Model Manager, OneSpace Drawing Manager, OneSpace Live! and OneSpace.net. PTC will continue to offer all CoCreate solutions as stand-alone offerings. Additionally, PTC plans to integrate CoCreate solutions with the PTC Product Development System (PDS) in order to offer CoCreate customers complementary product development capabilities including engineering calculations, dynamic publishing, visualization, high-speed machining, and enterprise content and process management.
“Intermec has been a long-standing customer of both PTC and CoCreate solutions,” said Ryan White, mechanical engineering manager at Intermec, a leading supply chain technology provider. “We believe we will benefit not only by being able to purchase these solutions from one vendor, but also from the planned integration of the solutions, which should enable us to lower our total cost of ownership and ease transfer of files between tools.”
With this acquisition, PTC embraces all the accepted approaches to mechanical modeling – parametric, explicit, derived and 2D – and is the only vendor to offer all of them based upon a customer’s specific needs. Any of these modeling techniques combined with the PTC PDS offers customers a competitive advantage unmatched by any other vendor in the industry.
“PTC’s acquisition of CoCreate will provide significant value for end users,” said Allan A. Fotinopoulos, senior business product lifecycle development architect at Pitney Bowes, a global provider of mainstream technology. “We look forward to seeing how the tools will complement each other to provide added value to various product development programs at Pitney Bowes, as well as seeing integration plans to assist us in adopting a complete PLM solution in the future.”
PTC financed the acquisition and related expenses with a combination of $50 million of cash and $220 million of debt from its existing revolving credit facility. PTC expects to repay the loan within two years.
Wachovia Securities acted as exclusive financial adviser to PTC in the transaction. CoCreate was a portfolio company affiliated with HBK Capital Management.
Commentary By Jeffrey Rowe, Editor
Well, that didn’t take long. It was only a few weeks ago that we learned that CoCreate was in play and PTC was the suitor. This acquisition reinforces the consolidation of the MCAD industry that continues to march on. Is it necessarily a good or bad thing? Like most mergers and acquisitions, it depends on how you look at it. Sometimes it’s not necessarily strictly one or the other, and often proves to be a bit of both, and I’m sure that will be the situation here. With the acquisition, PTC actually acquired the CoCreate OneSpace suite consisting of the core 3D modeling application, a PDM application, and a Web-based application for collaborative project workspace.
It’s ironic that PTC, with its strong legacy in parametrics, would acquire a company whose design philosophy in some respects goes counter to PTC’s, although it does illustrate a major trend occurring in the MCAD industry that is increasingly developing non-history-based methodologies and direct geometry editing, something that CoCreate calls Dynamic Modeling.
CoCreate’s non-history-based modeling approach, is unique, but is by no means is the company alone in offering it . Model history, of course has its place, but a history-based approach to 3D modeling is not always the best way to go, and CoCreate’s customer base proves this. However, as previously mentioned, the non-history-based approach is not exclusive to CoCreate OneSpace Modeling, because Kubotek’s KeyCreator, UGS’ NX5, and IronCAD also employ it, although with slightly different methods, but the results are largely the same. A history-based approach is what most parametric modelers (such as Pro/ENGINEER) employ, but it’s not always the best method or approach, especially for changes made to a model late in the design process. This is because history-based systems use a history tree to track and replay 2D profiles and modeling steps for generating and modifying 3D geometry. The main drawback is that each step in the history is dependent upon the profile and modeling step that came before it. The further along you get in the design process, the more complicated the design and its associated history become.
On the other hand, a non-history based approach is well-suited for manufacturers that change designs late in the design process, so they are not bound by the constraints and complications that a history tree can impose. Also, a non-history-based system can make data import easier because you don’t have to worry about the overhead of dealing with a history tree from a different system. Neutral file formats, such as IGES and STEP, are for all intents and purposes, native data to CoCreate OneSpace Modeling and other non-history based MCAD applications. This eliminates the burden of legacy data originating from another system.
CoCreate is the latest in a long series of acquisitions that PTC has made over the years that have included Computervision, Mechanica,Arbortext, and Mathcad. How will CoCreate’s product line fit into the mix? That’s hard to say because there is some overlap of the products, especially on the PDM side, but things should start sorting themselves out pretty quickly.
Will the relative incompatibility of the product lines come back to haunt PTC as it has with some of its past acquisitions? It will be interesting to see which, if either, one ultimately wins – CoCreate’s dynamic, non-history-based modeling; PTC’s explicit (the term that PTC is using for dynamic modeling since the acquisition announcement), parametric technique; or an optional choice between the two. Other companies are offering the choice, so why not PTC?. In my book, this acquisition was one the biggest events to occur in the MCAD community for 2007. And, I predict that sooner rather than later, there will be as many as two to three more smaller MCAD vendors swallowed up by bigger fish, that themselves may or may not already be a player in the MCAD arena. As always, next year promises to be another year filled with unexpected twists and turns for the MCAD community.
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