PTC to acquire field service software maker ServiceMax for $1.46B

CLOUD

PTC Inc., a publicly traded provider of software for manufacturers, has inked a deal to acquire ServiceMax Inc. for $1.46 billion.

The companies announced the transaction on Thursday. PTC is acquiring ServiceMax from private equity firm Silver Lake, which in turn purchased the company from General Electric Co. in 2018.

ServiceMax provides a field service management platform that companies such as wireless network operators use to carry out equipment repairs. Using the platform, a company can dispatch field technicians to the location where a piece of equipment has encountered technical issues. ServiceMax also provides a companion mobile app through which users can access technical data about the hardware that requires repairs.

Alongside its core feature set, ServiceMax offers capability designed to ease other aspects of enterprises’ field service operations. The company has built an artificial intelligence tool that can recommend potential ways to fix a malfunction and rank them by likelihood of success. Another built-in capability helps companies manage the spare parts used during repairs.

Some ServiceMax customers deploy its platform alongside software from PTC, with which ServiceMax has maintained a partnership since 2015. Nasdaq-listed PTC provides computer-aided design software that manufacturers use to develop new products. The company also sells a range of other applications that help with related aspects of manufacturers’ business operations.

ServiceMax’s features for managing equipment repairs will complement PTC’s product portfolio. Alongside its product design software, PTC sells an application called ThingWorx that makes it possible to monitor equipment for technical issues. The company also offers Servigistics, an application that helps manufacturers procure the spare parts necessary for repairs and manage component inventories.

“Upon completion of this acquisition, PTC will have the unique ability to complement the full digital product definition from our computer-aided design and PLM solutions with detailed usage information from our internet of things solutions and the complete service history from ServiceMax,” said PTC Chief Executive Officer Jim Heppelmann.

PTC expects to complete the acquisition in early January. The company will pay $808 million of the $1.46 billion acquisition price upon the deal’s closing and the remaining $650 million in October 2023. PTC will finance the transaction with cash on hand, a new $500 million loan and an existing credit facility.

The company estimates that ServiceMax will contribute $160 million to its annualized recurring revenue in its fiscal quarter ended March 31, 2023. The deal is also set to be accretive to PTC’s cash flow from operations, free cash flow and adjusted free cash flow targets in its 2023 fiscal year.

Image: ServiceMax