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The acquisition of software products, expected to close by mid-2019, will represent a total addressable market of more than $50 billion, according to HCL
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INDIAN IT services major HCL Technologies announced the acquisition of select IBM software products for $1.8 billion as part of its strategy to strengthen its products and platforms business. The acquisition will represent a total addressable market of more than $50 billion, according to a regulatory filing by HCL.
The transaction is expected to close by mid-2019, subject to completion of applicable regulatory reviews, HCL said in the filing. The transaction also includes the transfer of certain headcount and physical infrastructure.
The software products in scope include Appscan for secure application development, BigFix for secure device management, Unica for marketing automation, Commerce for omnichannel eCommerce, Portal for digital experience, Notes & Domino for email and low-code rapid application development, and Connections for workstream collaboration.
“HCL indicated that the acquired products have an addressable market opportunity of $50 billion with most of the segments growing in double digits. The acquisition will enable HCL to address the end-to-end market opportunity versus the previous licensing arrangement,” wrote a JM Financial Research analyst in a note.
HCL and IBM have an ongoing IP Partnership for five of these products.
“We continue to see great opportunities in the market to enhance our products and platforms offerings. The products that we are acquiring are in large-growing market areas like security, marketing and commerce, which are strategic segments for HCL. Many of these products are well-regarded by clients and positioned in the top quadrant by industry analysts,” said C Vijayakumar, president and CEO, HCL Technologies.
Over the last four years, IBM has been prioritising investments to develop integrated capabilities in areas such as Artificial Intelligence for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industryspecific platforms and solutions including healthcare, industrial Internet of Things, and financial services.
“We believe that the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as standalone products. At the same time, we believe that these products are a strong strategic fit for HCL, and that HCL is well-positioned to drive innovation and growth for their customers,” said John Kelly, IBM senior vice-president, Cognitive Solutions and Research.