In line with steps taken by various Indian IT consulting giants to strengthen their tech, HCL Technologies is going to acquire Mumbai-based Geometric, an engineering solutions and services firm in a share swap deal amounting to about $200 million.
HCL will acquire about 74% of the total business of Geometric as the deal does not include the 58% stake which Geometric has in a joint venture called 3DPLM Software Solutions Ltd with Dassault Systèmes. After the merger with HCL, 3DPLM will fully get integrated with Dassault Systèmes.
Post the merger, HCL will inherit many processes, methodologies and intellectual properties of Geometric in PLM (product lifecycle management)and digital manufacturing. Furthermore, the transaction will also bring specialised professionals in PLM consulting and in the mechanical and manufacturing engineering space.
The deal is thus expected to help HCL in creating an end–to–end engineering and research capabilities across the full product lifecycle — hardware, software, mechanical & manufacturing engineering and PLM consulting.
This would then help the company in getting more and larger deals by the engineering firms.
On the other hand, Geometric sees the deal as beneficial to its customers and employees because they get to enjoy the advantages of working with a larger company in the form of HCL Technologies.
I welcome this as a truly synergistic transaction, as both our employees and customers will benefit.
said Manu Parpia, managing director of Geometric.
HCL will offer 43 HCL shares to the shareholders of Geometric for every 43 shares owned by them, thereby issuing about 15.64 million shares. Going by the latest value of HCL’s shares at 820.70 on BSE, HCL has pegged the valuation of Geometric business at 1,284 crores.
The shareholders of Geometric will also receive one listed redeemable preference share of Rs 68 each, carrying an annual dividend of seven per cent, in 3DPLM against every one share of Geometric.
Geometric was founded in 1984 by Godrej and became an independent firm a decade later in 1994. The firm specialises in engineering solutions and services, particularly in automotive and industrial engineering segments. It has over 60 global clients in the US and Europe.
In December 2015, it employed 2,606 people across 13 global delivery locations in the US, France, Germany, Romania, India and China.
Reportedly, the company had been looking for a strategic investor for the past few years. And HCL has been looking to bolster its engineering and research capabilities. At present, HCL earns a revenue of about $1.16 billion from offering solutions to engineering firms which is 19% of its total $5.95 billion revenue.
The company ranks fourth globally in terms of the scale of solutions offered to the engineering firms and is expected to move to the third position after this acquisition.