PTC to Acquire Kepware, Will Extend Internet of Things Offering with Access to Industrial Automation Data

PTC to Acquire Kepware, Will Extend Internet of Things Offering with Access to Industrial Automation Data

PTC today announced it has signed a definitive agreement to acquire Kepware, a software development company that provides communications connectivity to industrial automation environments, for approximately $100 million, plus up to an additional $18 million based on achievement of certain strategic initiatives and financial results.

The acquisition will enhance PTC’s portfolio of Internet of Things (IoT) technology, and accelerate the company’s entry into the factory setting and Industrial IoT (IIoT).

Founded in 1995 and located in Portland, Maine, Kepware serves customers in more than 120 countries in such industries as manufacturing, oil and gas, building automation, and power and utilities. The company’s flagship product, KEPServerEX, connects disparate devices and control systems, providing users with a single source of industrial data.

Kepware’s KEPServerEX will become a strategic component of the PTC ThingWorx® IoT technology platform. Once the companies’ products are integrated, machine data will be able to be aggregated into the PTC ThingWorx platform, integrated with a wide array of internal and external information, and then automatically analyzed using ThingWorx machine learning capabilities. The integration will allow organizations to gain tremendous enterprise-wide insight and to proactively optimize mission-critical processes – enabling them to improve operational performance, quality, and time to market.

“The digital world is opening up new opportunities for organizations to access their manufacturing operations and use the data to achieve new potential and influence business performance. The factory of the future requires manufacturers to shift their focus and mindset toward improving networkwide manufacturing capabilities,” said Simon Jacobson, Principal Analyst, and Rick Franzosa, Research Director, Gartner.*

In its June 2015 research report, entitled The Internet of Things: Mapping the Value Beyond the Hype, the McKinsey Global Institute identified the factory as one of the largest sources of potential value to be realized from the adoption of the Internet of Things. PTC has established a dedicated business segment and has formed a strategic alliance with GE to pursue this brilliant factory opportunity. The acquisition of Kepware is intended to complement the alliance with GE.

Kepware and PTC share many common customers that will be able to realize value from the acquisition. Industrial environments already leveraging Kepware technology will be able to benefit from the added breadth of capabilities available in the PTC ThingWorx IoT technology platform. The acquisition of Kepware will also provide a fast-to-value connectivity option for PTC customers to gain visibility into data from a vast range of industrial controls and production equipment, enabling them to kick-start their smart, connected factory initiatives.

“PTC is committed to helping manufacturers, infrastructure operators, and others realize the enormous value inherent in the Internet of Things,” said Jim Heppelmann, president and CEO, PTC.

“With this acquisition, we will gain entry into heterogeneous factory and operating environments with robust technology, an impressive list of customers, and a high-quality, profitable company with incredibly talented employees.”

“Kepware and PTC share a common vision of helping organizations realize the potential of the Industrial Internet of Things,” said, Tony Paine, CEO, Kepware. “We believe this acquisition will benefit our customers, partners, and employees – and ultimately drive software innovation for industrial automation markets. We are excited for the opportunity to become part of PTC.”

Over the past 12 months, privately-held Kepware generated approximately $20 million in revenue. PTC expects to draw on its credit facility to finance this transaction and expects Kepware to be neutral to its FY’16 non-GAAP EPS. The transaction is expected to close in early 2016, subject to customary closing conditions, including regulatory approval. PTC intends to maintain the Kepware partner ecosystem and to continue developing and enhancing the Kepware technology, once acquired.

*Gartner, Predicts 2016: Opportunities Abound for the Factory of the Future to Reach Its Potential, Simon F. Jacobson, Rick Franzosa, 25 November 2015.

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