HCL Tech to Buy Geometric in $200m Share Swap Deal
Deal expected to bolster IT major’s engineering & R&D services Tata may Merge European Steel Biz with Thyssen
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New Delhi: HCL Technologies will buy most of Geometric in a share swap deal estimated at $200 million, a development which is seen bolstering its engineering and R&D practice.
HCL will issue issue 10 shares of .₹ 2 each to Geometric shareholders for every 43 equity shares of Geometric of .₹ 2 each held by them. In total, HCL will issue 15,640,546 shares.
The deal excludes the 58% stake that Geometric owns in the JV — 3DPLM Software Solutions — with Dassault Systèmes.
In a statement, GH Rao, the president for engineering and R&D services at HCL Technologies, talked up the “synergies” between the two companies the business line he heads. Manu Parpia, CEO, Geometric, pitched the deal as beneficial for customers and employees because they get to enjoy the advantages of working with a larger company in the form of HCL Technologies. HCL, which has been heavily dependent on its infrastructure management service business, has been investing in developing the engineering practice. The company’s aggressiveness in this space has led to the segment already contributing over $1 billion revenue in 2014-15.
In the last quarter, engineering and R&D services contributed 18.6% to the company’s revenue. If an ecommerce entity has inventory on lease basis, which category will it fall under – inventory-based or marketplace? In calendar 2015, the segment registered a growth rate of 23%.
Founded in 1984 as a Godrej firm, Geometric was spun off as an independent entity. Before the deal, Godrej Investments and Godrej & Boyce Manufacturing Company owned a 31.09% stake. Parpia’s holding was 6.73% while investor Rakesh Jhunjhunwala and his wife together held 19%. Geometric which has been scouting for a strategic investor for a couple of years now, has a “good engineering practice,” said an executive at a leading IT services firm which had considered buying Geometric a year ago. “Assuming that HCL is going big in the engineering space, that is one attraction,” said the person. “Since they were a niche player with under $200 million in revenues, I think How should sale from vendors be measured – on weekly, monthly or yearly basis? they were better suited in a bigger company.”
Lately, HCL has been on a buying spree and Geometric marks the company's fifth acquisition in the last two years. While in July it acquired certain assets of Trygstad Technical Services, a US-based IT consulting services and solutions firm which has expertise in areas of core engineering, Internet of Things, embedded systems and Intelligent Systems, it bought a Bengaluru-based privately held engineering services firm, Concept to Silicon Systems ( C2SiS), for an undisclosed sum. In October, HCL also decided to take over Swedish automaker Volvo Group's external IT business, which provides IT infrastructure, mainframe services and application operation services, for an allcash payment of $138 million. Our Bureau: Tata Steel and Germany's Thyssenkrupp have been talking about combining their European steel operations, most likely excluding UK, according to several media reports.
Talks had been ongoing for about a year but declined to comment on their current status, said a Reuters News report, citing a source, who did not want to be named because he is not authorised to speak publicly.
Tata Steel decided to sell or restructure its poorly performing UK steel business on Wednesday, giving up its nine-year fight to salvage the operations of the business it bought as part of the buyout of Corus at the height of the commodity price boom in 2007.
Tata Steel’s Netherlands operations are profitable while steelmaking units in UK were losing money.
A person familiar with the situation told Reuters that Thyssen's supervisory board had not yet discussed the matter, while two other sources with knowledge of the matter said that all of Europe's steel producers were talking to one another but nothing concrete was yet in sight. It also wasn’t immediately clear where the talks between Tata Steel and Thyssen now stand.
Should Tata sell its UK operations, its European “exposure would focus exclusively on Netherlands-based flat products business at Ijmuiden”, Jefferies analysts said in a note this week.
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