Siemens divests SEN to private US equity group, Gores

30 July 2008

Industrial conglomerate Siemens AG plans to spin off its call center equipment maker Siemens Enterprise Communications GmbH & Co. KG (SEN) unit into a joint venture with Los Anglels-based private equity firm The Gores Group. SEN was created from its parent Siemens AG two years back with the intention of being divested.

A joint venture is being formed  between Gores Group and Siemens in which SEN will be combined with two other Gores portfolio companies, router and switchmaker Enterasys Networks Inc. and call center software maker SER Solutions Inc. 

At the operational level, the business will be driven by Gores, which will own a 51-per cent stake in this joint venture. The new venture will receive euro250 million ($550 million) from Gores and Siemens AG, allowing the new business to start debt-free and a financial corpus for investment in R&D and potentially even strategic acquisitions.

By divesting through the private equity route as joint venture rather than a merger with another organisation, both companies will avoid the problems of organisational integration, with its potential effects on service and support. By not merging with a competitor, the new SEN and its customers will avoid the uncertainty and potential costs of the need to rationalise product lines.

 The joint venture will be entitled to continue using the Siemens brand. Key patents and licenses will be transferred to the joint venture.

"Siemens Enterprise Communications will continue to be a preferred supplier to Siemens, to use the Siemens One sales network and to cooperate on customer projects with Siemens," the German conglomerate said ina statement.