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
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.