HCL Technologies to acquire select IBM software products for $1.8 billion

HCL Technologies to acquire IBM software assets for $1.8

HCL Technologies to acquire IBM software assets for $1.8

HCL Technologies has parted with $1.8 billion to pick up a number of IBM software products.

The company plans to fund the deal - which is expected to close by mid-2019 - through internal accruals and debt of $300 million at close and pay most of the acquisition price after the first year.

HCL's revenue from software services business, however, rose about 21 per cent to 87.11 billion rupees, leading the company to beat its second-quarter profit.

The prospects of the HCL-IBM alliance, analysts believe, lie in the value addition to the tool stack through software-based services that could potentially expand the customer base. It was only a couple of months back that the Big Blue agreed to buy open source cloud services provider Red Hat Inc. for $33 billion.

Both the firms have an ongoing IP (Intellectual Property) partnership for five of these products.

According to HCL Technologies CEO C. Vijayakumar, HCL is acquiring these products that are in "large growing market areas like security, marketing and commerce, which are strategic segments for HCL".

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"Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts".

He further added that these products will be combined with the company's Mode-1 and Mode-2 services and their large-scale deployments will serve global enterprises across a wide range of industries and markets.

"I am confident that these products will see good growth trajectory backed by our commitment to invest in product innovation coupled with our strong client focus and agile product development", Vijayakumar added.

With the acquisition of this software portfolio from IBM, HCL will be able to combine the entrepreneurial capability, speed and performance of a company like HCL with over 100,000 employees worldwide with the software in such a way that will set it apart from its competitors, Oberst said.

Noting that the suite of products being acquired were among the high-value segments, IBM Vice-President for Cognitive Solutions and Research John Kelly said the US-based IT behemoth believed the time was right to divest its software assets, as they were being delivered as stand-alone products.

The software products in the deal include Appscan (for secure application development), BigFix (for secure device management), Unica (for marketing automation), Commerce (for omni-channel eCommerce), Portal (for digital experience), Notes & Domino (for email and low-code rapid application development), and Connections (for workstream collaboration).

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