HCL to Ac­quire 7 Soft­ware Prod­ucts from IBM for $1.8B Co says deal will give it ac­cess to global clients to whom it can cross-sell ser­vices; in­vestors not con­vinced

The Economic Times - - Front Page - Our Bureau

New Delhi: HCL Tech­nolo­gies has taken its bold­est bet ever by ac­quir­ing seven soft­ware prod­ucts from IBM for $1.8 bil­lion, the big­gest ac­qui­si­tion by an In­dian IT ser­vices com­pany that is in­tent on boost­ing rev­enue growth in emerg­ing ar­eas such as dig­i­tal and cloud com­put­ing.

The Noida-based com­pany’s ag­gres­sion — it has ac­quired 15 com­pa­nies in the past decade — failed to en­thuse in­vestors who pun­ished the stock on Fri­day. Some an­a­lysts too ques­tioned the wis­dom of pay­ing such a steep price for in­tel­lec­tual prop­erty (IP) that could have been built in-house.

HCL Tech­nolo­gies CEO C Vi­jayaku­mar said the ac­qui­si­tion will help the com­pany gain ac­cess to global cus­tomers to whom it can cross-sell ser­vices.

“In terms of busi­ness (we will) cre­ate 5,000 cus­tomers glob­ally; or­gan­i­cally it will take (us) 20-plus years,” said Vi­jayaku­mar, who has led HCL’s ac­qui­si­tion spree with six deals closed since his as­cen­sion to the top post in 2016.

“To cre­ate this kind of cus­tomer base with soft­ware con­tracts is a very longterm af­fair. Now that we have these con­tracts, there is so much more we can do with these cus­tomers,” he said.

In­vestors, how­ever, were not con­vinced. HCL Tech­nolo­gies shares fell as much as 7.7% in in­tra-day trad­ing be­fore clos­ing 4.98% down at .₹ 961.55 on the Bom­bay Stock Ex­change.

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