Super quick: PTC to acquire ServiceMax for $1.5 billion

Nov 17, 2022 | Hot Topics

PTC just announced that it will acquire ServiceMax in a $1.46 billion deal that’s expected to close in January. You’ve probably heard of ServiceMax; they offer field service management solutions in the cloud. ServiceMax has been a competitor/partner for PTC’s own field service offering since 2015, helping aerospace, medical device, and other manufacturers as they transition their businesses from selling objects to selling the capabilities those objects provide –aircraft operational engine hours is the most famous example. These manufacturers increasingly see field service as a key strategic differentiator since they now have to meet product performance metrics or face penalties. Field service becomes an important value proposition rather than an afterthought source of revenue.

PTC CEO Jim Heppelmann says of the deal, “The addition of ServiceMax will realize a key part of PTC’s closed-loop PLM strategy. The PLM capabilities PTC has long offered to engineering and manufacturing departments provide the system of record for the digital definition of any product configuration. ServiceMax will complement this by providing the system of record for monitoring and servicing product instances after they leave the factory and move into customer use. Upon completion of this acquisition, PTC will have the unique ability to complement the full digital product definition from our computer-aided design (CAD) and PLM solutions with detailed usage information from our internet of things (IoT) solutions and the complete service history from ServiceMax. PTC is poised to be the only company that will be able to offer manufacturers this comprehensive view of their products at each stage of the lifecycle.”

Neil Barua, CEO of ServiceMax adds, “ServiceMax and PTC have a longstanding relationship rooted in the common profile of our customers, the natural synergies of our products, and a shared understanding of the importance of product data at different stages of the lifecycle … we’re excited for the ServiceMax team to strengthen the service offerings of PTC’s digital thread and closed-loop PLM portfolio.”

PTC says that the purchase price will be funded in two stages, with $808 million to be 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 term loan. The company adds that 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. Note that revenue isn’t mentioned there; likely due to accounting treatment.

We’ll learn a bit more at PTC’s investor event in a few minutes.

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