HCL Technologies Limited (HCL) has announced an agreement to acquire (through demerger) all of the business of Geometric Limited, except for the 58% stake that Geometric owns in the joint venture – 3DPLM Software Solutions Ltd., with Dassault Systèmes. In consideration of this acquisition, HCL will issue 10 equity shares of Rs. 2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs. 2 each held by them. In total, HCL will issue 15,640,546 equity shares of Rs. 2 each. Geometric is one of India’s leading PLM consulting, mechanical engineering and manufacturing engineering services providers.
HCL’s global engineering services business, with a revenue of around $1.2 billion in calendar 2015, is a leader in this space, and has an industry leading position in hardware & software engineering, product development & testing, embedded, digital and mechanical engineering. The acquisition strengthens HCL’s presence significantly in the PLM consulting as well as mechanical and manufacturing engineering space. It also significantly strengthens HCL’s automotive and industrial practices.
The business that HCL is acquiring, in one of the largest acquisitions in the engineering services space, has more than 60 global clientsin USA and Europe, majorly in automotive and industrial engineering segments. As of December 2015, it employs 2,606 people across 13 global delivery locations in the US, France, Germany, Romania, India and China. HCL will inherit several unique Geometric processes, methodologies and intellectual properties in PLM and digital manufacturing, along with highly specialized professionals in the PLM consulting as well as mechanical and manufacturing engineering space. The transaction thus creates a unique portfolio of end–to–end engineering and R&D capabilities across the full product lifecycle – hardware, software, mechanical & manufacturing engineering and PLM consulting.
G.H Rao, President, Engineering and R&D Services, HCL Technologies said, “We are looking forward to an exciting journey and extend a warm welcome to the employees, customers and partners of Geometric. With broad end–to–end capabilities and rich experience across PLM consulting, mechanical and manufacturing engineering that Geometric brings in, the synergies allow us to take advantage of the rapidly growing manufacturing engineering and PLM services market. It also provides several cross–sell and up–sell opportunities as the customers will benefit from a unique services portfolio of end–to–end engineering, R&D, digital technologies and internet of things capabilities.”
Manu Parpia, CEO and MD of Geometric Ltd. said, “I welcome this as a truly synergistic transaction, as both our employees and customers will benefit. Our customers will have access to a wide range of engineering services which complement Geometric’s offerings. Geometric’s employees will have the opportunity for growth as they can serve HCL Tech’s large customer base.”
Headquartered in Mumbai, Geometric was incorporated in 1994 and is listed on the Bombay and National Stock Exchange. For the Fiscal Years ended March 2014 & March 2015, the revenues were INR 7,871.2 million & INR 8,139.3 million respectively. For the nine–month period ended Dec 31, 2015, the revenues were INR 6,735 million. The transaction is expected to be accretive on Cash Earnings per Share.
The acquisition would take place through a Scheme of Arrangement which would be subject to the approval of the Hon’ble High Courts at Mumbai and Delhi in addition to the approval of the regulatory authorities.
