HCL Technologies has agreed to buy
all of the business done by Mumbai based software firm Geometric Ltd, except a
joint venture the latter has with Dassault Systems SA, in a share swap deal
valued at $190 Million. The transaction will help HCL, the country fourth
largest information technology firm, increase its business in the engineering
services space.
Geometric accepted Noida based HCL
Technologies offer of a share swap under which its shareholders will get 10 HCL
shares for every 43 share they hold in Geometric. HCL will issue a total of
15.64 Million shares. HCL will get about 74% of Geometric total business and
expects the transaction to be completed by the end of this year.
Geometric on its part, will merge
into 3DPLM software solutions Ltd, its joint venture with Dassault Systems,
thereby giving 100% ownership to the French Company. This will help HCL to
scale up its offerings and win large deals from engineering companies. For
promoters of Geometric, this marks the end of a three decade journey after
Godrej set up Geometric in 1984 and incorporated it as an independent firm in
1994.
Upon completion of this merger, HCL
Technologies will generate $1.34 Billion from engineering services and become
the world’s third largest technology engineering outsourcing company. Geometric
has not recorded any growth in revenue over the last two years despite the
product engineering space growing at a health space, and for this reason most
equity analysts questioned the rationale of the deal.
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