Hitachi is buying U.S. software company GlobalLogic for $9.6 billion
Hitachi Ltd, the Japanese electrical equipment company, revealed on Wednesday, March 29, that it would acquire GlobalLogic Inc., a software firm headquartered in California, U.S.A.
The deal to buy the company will cost Hitachi a stunning $9.6 billion that will include the repayment of GlobalLogic’s debt. As per Reuters, the Japanese firm will complete the transaction through cash and bank loan fundings by the end of July.
The decision to acquire a software company
It was revealed that Hitachi that has always been known as an industrial corporation is aiming to expand its business further. It has already conquered electronics and digital services and now ready to explore other trades. Likewise, the acquisition of GlobalLogic is part of Hitachi's plans to focus on IT-related ventures, especially its Lumada subsidiary.
“Through the acquisition, Hitachi expects the addition of GlobalLogic’s advanced digital engineering capabilities and its solid client base including major technology companies to strengthen the digital portfolio of “Lumada,” Hitachi Vantara LLC, data management and digital business solutions,” Hitachi stated in a press release.
It was reported that its IT-related sales results are expected to climb up to ¥1.97 trillion by the end of March. With GlobalLogic on board, Hitachi also expects Lumada’s growth in the global market.
"Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life." GlobalLogic President and CEO Shashank Samant said regarding the acquisition. "We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses."
The American company was only founded in 2000. In its more than two decades in the business, it has employed over 20,000 employees who are working in various GlobalLogic offices spread in 14 countries.
The company mainly offers software engineering services, and its expertise has stretched to chips and cloud computing services. It has 400 active clients in different fields of business, including finance, automotive, and healthcare.
Meanwhile, Nikkei Asia reported that the news of Hitachi’s acquisition of GlobalLogic was not well received by the industry, and this was evident with the seven percent decline of its share price after the deal was announced.