HCL Technologies to buy Geometric Business

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.

HCL Technologies Acquires PowerObjects

HCL Technologies has acquired PowerObjects, a US based provider of Microsoft Dynamics Customer resource management solution, for $46 Million, to bolster its offerings in the applications development space. Together HCL and Power Objects will now offer one of the largest Microsoft Dynamic Practices in North America.

Based in Minneapolis, PowerObjects has more than 250 employees who will now be transferred to the rolls of HCL. The total consideration for the transaction includes contingent payments which are subject to certain financial milestones. The existing leadership team of PowerObjects will remain in place and no workforce changes are planned.

HCL has been on an acquisition spree of mostly small companies. PowerObjects is the fourth company it has bought this year. This week, HCL would buy Swedish automaker Volvo Group’s External IT business, which provides IT Infrastructure, mainframe services and application operation services, for an all-cash payment of $138 Million.

Microsoft Dynamics is one of the fastest growing CRM products. Research firm Gartner expects CRM to become a $36 Billion Worldwide market by 2017 growing at an annual rate of 13.3% since 2014. It is projected to grow faster than any other enterprise software category, as businesses look to build upon term customer relationships.

Infosys Buys Panaya

Infosys is an Indian Multinational corporation that provides business consulting, information technology, software engineering, and outsourcing services. It is headquartered in Bangalore, Karnataka. Panaya is American software as a Service (SaaS) company that provides cloud based quality management services for enterprise applications worldwide. Its services run on the Amazon Product Advertising API.

Infosys announced that it would buy automation technology company Panaya Inc, at an enterprise value of about $200 Million, as the third largest IT Company in the world looks to boost competitiveness and margins. Panaya Technology would help it to bring automation to several service lines through software as a service model, reducing risks, costs, and the time taken to bring services in the market.

For $8.25 Billion turnover Infosys, which has a cash reserve of $5.4 Billion, this is the second largest acquisition after the September 2012 buyout of Switzerland based SAP services company Loadstone Management Consultancy for $345 Million. Infosys is acquiring Panaya at a time when IT services companies are laying greater emphasis on automation as workforce optimization holds key to profitability for the industry which is primarily driven by human resource.

Infosys and its peers TCS, Wipro, and HCL have been deploying automation to enhance delivery to their clients. Infosys has been traditionally shy of acquisition making less than half a dozen buyouts in its existence of over 33 years most of which were small with deal size below $50 Million. Infosys has been making big bets on automation and other new technology like artificial intelligence and cloud based services as the company tries to regain some lost ground from rivals like Tata Consultancy Services.