PTC’s Acquisition of Kepware Will Extend Internet of Things Offering and Add Technology to Partnership with GE

PTC 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 help to enhance PTC's portfolio of Internet of Things (IoT) technology, further accelerating the company's entry into the factory setting and Industrial IoT (IIoT), and as a result add technology that can be leveraged by PTC's partnership with GE.

Founded in 1995 and located in Portland, Maine, Kepware serves customers in over 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 common 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 an array of internal and external information, and then automatically analyzed using ThingWorx machine learning capabilities. The integration will allow organizations to gain additional enterprise-wide insight and to proactively better optimize mission-critical processes – enabling them to help improve operational performance, quality, and time to market.

Kepware and PTC share many common customers. Industrial environments already utilizing Kepware technology will be able to leverage capabilities available in the PTC ThingWorx IoT technology platform. The acquisition of Kepware will also provide a connectivity option for PTC customers to gain visibility into data from a range of industrial controls and production equipment, enabling them to extend their smart, connected factory initiatives.

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.

This acquisition should also provide additional technology that can be leveraged by PTC's relationship with GE, who previously announced that the two companies are partnering to deliver a manufacturing solution that will be available within GE's Brilliant Manufacturing Suite. This new GE-branded manufacturing solution leverages the capabilities of PTC's ThingWorx Industrial Internet of Things application enablement environment. The result is an industry-hardened solution that features more flexible dashboards and more powerful data analytics integrated with GE's software capabilities on the manufacturing plant floor.

The joint solution connects disparate systems, from the shop floor to the ERP, and offers a dashboard and differentiated user experience with consumer-like drag-and-drop capabilities tailored to each user's role.

GE and PTC will align their respective global manufacturing sales and marketing teams to jointly pursue opportunities worldwide. As GE is one of the world's largest manufacturing companies, the GE-PTC solution will be implemented within GE's internal manufacturing plants as part of its Brilliant Factory initiative.

Keywords: Internet of Things (IoT), Industrial IoT (IIoT), Industrial Data, Manufacturing,, ARC Advisory Group.