HCL technologies acquired Geometric

By : |April 2, 2016 0
www.computerworld.in

HCL Technologies, the country’s fourth-largest information technology (IT) firm, declared on Friday that it is buying all of the business carried out by Mumbai-based software firm Geometric Ltd, except a joint venture the latter has with Dassault Systèmes SA, in a share-swap deal valued at $190 million. The transaction is expected to help HCL increase its business in the engineering services space.

HCL will issue 10 shares of Rs 2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs 2 each held by them. In total, HCL will issue 15,640,546 shares. Since HCL’s shares ended the day at Rs.820.70 on BSE, this means HCL has valued the firm’s business at Rs.1, 284crore.

G.H Rao, the President of HCL said, “With broad end-to-end capabilities and rich experience across PLM consulting, mechanical and manufacturing engineering that Geometric brings in, the synergies allow us to take advantage of the rapidly growing manufacturing engineering and PLM services market.”

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HCL, which has been too much dependent on its infrastructure management service business, has been investing in developing the engineering practice. The company’s assertiveness in this space has led to the segment already contributing to $1 billion revenue in 2014-15. In the last quarter, engineering and R&D Services contributed 18.6 percent to the company’s revenue. In 2015, the segment claimed a growth rate of 23 percent.

Manu Parpia, the CEO and MD of Geometric, pitched the deal as beneficial to customers and employees because they get to enjoy the advantages of working with a larger company in the form of HCL Technologies.

Pareekh Jain, research director of engineering services at HfS Research says, “HCL, with the acquisition of Geometric, will move to No. 3 in global rankings. As engineering services are transforming from niche to mainstream, there will be consolidation in the sector. Geometric has good talent and good capabilities but was struggling with sales. Under HCL umbrella, I expect Geometric has the capability to grow at a higher rate.”

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