Confirming last week's rumors, Siemens announced today that its Enterprise Communications division will be acquired by Los Angeles-based private equity firm The Gores Group. One of the most intriguing parts of the deal is that Gores Group, which we noted last week also owns Enterasys, is going to combine Siemens Enterprise, Enterasys and another one of its portfolio companies, SER Solutions, which makes contact center systems, into a joint venture.
Confirming last week's rumors, Siemens announced today that its Enterprise Communications division will be acquired by Los Angeles-based private equity firm The Gores Group. One of the most intriguing parts of the deal is that Gores Group, which we noted last week also owns Enterasys, is going to combine Siemens Enterprise, Enterasys and another one of its portfolio companies, SER Solutions, which makes contact center systems, into a joint venture.Gores is acquiring 51% of Siemens Enterprise, at a price that Siemens did not disclose in its announcement; Siemens will retain 49% ownership of Enterprise Communications and will enter into a joint venture with Gores Group to build the new, expanded company. In addition to Gores' contribution of Enterasys and SER, the 2 companies together will contribute 350 million Euros or just under $550 million USD to the joint venture.
Obviously, we'll be following this throughout the day.
Update 1: Siemens AG (the parent company) CFO Joe Kaeser and Gores Group CEO Alec Gores are holding a press conference in Munich in 1 hour.
Update 2: I'll take the first crack at this. This looks like a great move for Siemens, first and foremost because it removes the doubt from customers' minds about what's going to happen to the company and whether they should commit to Siemens Enterprise products. And because the acquirer is a private equity group, customers don't have to worry about Nortel (one of the rumored suitors) or another PBX company coming in and trying to rationalize product lines.
The Siemens/Enterasys/SER joint venture is really interesting. In theory, it's a great addition, for the obvious reason that it gives Siemens a direct play in LAN/WAN data networking. In practice, that may win deals here and there, but having a combined voice/data play, even within the same firm or JV, doesn't seem to have helped companies like Nortel, which have both voice and data, stop the inexorable march of Cisco.
Interestingly, as recently as Interop in May, Enterasys was talking in terms of being in acquisition mode, as a play to grow into a size where it could compete more effectively against Cisco. Also noteworthy in that Network World article is Enterasys's total revenue figure of $350 million, which makes it considerably smaller than the amount of money that Siemens AG and Gores are going to pour into the new joint venture.
And speaking of that cash infusion, we'll need to see what exactly it's for. On the Siemens side, at least, product development/R&D isn't a particularly pressing problem, it seems to me; the OpenScape UC system and the HiPath 8000 that has been folded into it are well-regarded and the architecture was just refreshed earlier this year with the announcement of the UC Server, which can run all the components: OpenScape client apps, HiPath 8000 (now called OpenScape Voice), contact center and video.
So hopefully, a good chunk of that $550 million investment by Siemens AG and Gores will go to developing channel and marketing strategies, because let's face it, when you're competing against Cisco and Microsoft, that's where the battle is won or (more often) lost.
One final sidelight: Enterasys had partnered up with ShoreTel as its VOIP mate; presumably that arrangement will be...revisited.
