Hitachi To Acquire Software Developer GlobalLogic for $9.6 Billion

Kimberly Redmond  |

Video source: YouTube, Hitachi Brand Channel

Hitachi Ltd (OTC US:  HTHIYannounced it will buy Silicon Valley-based software development services provider GlobalLogic Inc for $9.6 billion, including repayment of debt, in an effort to strengthen its digital services business. 

On Wednesday, the Japanese industrial company said the acquisition will help it meet a growing demand for technology services, as well as provide Hitachi with a strong client base and digital engineering capabilities. 

Besides boosting its digital operations across a range of industries, like energy, information technology and healthcare, Hitachi said the deal will help it speed the “digital transformation” of some of its core businesses such as railways.

The transaction will be funded with cash and bank loans and is expected to close by the end of July, according to Hitachi.

Founded in 2000, Silicon Valley-based GlobalLogic offers software engineering services to industries including automotive, healthcare and finance. It has more than 20,000 employees in 14 countries, operating software product engineering centers and design studios. 

The company is privately owned by Canada Pension Plan Investment Board, Partners Group AG and other individuals including GlobalLogic executives and is expected to generate revenue of $1.2 billion for fiscal 2021, according to The Associated Press.

The company’s past projects have included working with McDonald’s Corp (NYSE:  MCD) on its customer app and in-store digital ordering system and with chipmaker Qualcomm Inc (Nasdaq:  QCOM) on a fingerprint recognition system, according to its website

GlobaLogic also created a digital magazine app for Reuters and a mobile e-commerce platform for Kohl’s Corp (NYSE:  KSS).

Shashank Samant, president and chief executive officer of GlobalLogic, said, “Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life.”

Samant also said, “We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses.”

In a statement, Hitachi chief executive officer Toshiaki Higashihara said, “Together we will create new social, environmental and economic value for our globally expanding client companies and elevate QoL, or quality of life, for people through contributions to realize sustainable society.”

The acquisition is part of the Japanese industrial conglomerate’s 2021 mid-term plan to pivot from electronics hardware to digital services. 

Last year, Hitachi bought ABB Ltd’s (NYSE:  ABB) power grid business for $7 billion and also made a series of divestitures of its domestic hardware subsidiaries. It has also sold its chemical unit and diagnostic imaging business.  

Commentary: Breaking the Supply Chain Bottleneck

The company has also committed to invest 1 trillion yen ($9 billion) to bolster the digital capabilities of its businesses. 

According to Reuters, the company has been in talks with private equity firms to sell Hitachi Metals Ltd, a deal that could be worth more than $6.4 billion.

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Source: Equities News

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