Japan’s Hitachi has confirmed plans to buy US digital engineering services company GlobalLogic for $9.6 billion in a deal that will give the sprawling conglomerate a more global IT/digital market and capabilities.
Hitachi President and CEO Toshiaki Higashihara said: “The synergy of GlobalLogic’s leading experience design and innovation with Hitachi’s expertise in IT, operational technology, and products, will help us realize our goal to be the leading digital transformation innovator in social infrastructure worldwide.”
Hitachi has been working to generate more revenue from IT services, including Industrial IoT, but as the Nikkei notes, while half of its revenue comes from overseas, this largely comprises hardware and engineering services ranging from nuclear plants to rolling stock; some 70% of its IT sector revenues come from Japanese clients; primarily across financial services and government. The buyout will give it a more global digital focus.
An investor presentation suggested that Hitachi sees the GlobalLogic deal as a way to give heft to its Santa Clara-based subsidiary Hitachi Vantara, which combines the former Hitachi Data Systems storage and data centre infrastructure business, its IoT business, and the Pentaho data analytics business (Hitachi Vantara also owns REAN Cloud, a cloud Systems Integrator) as well as boosting its nascent “Lumada” IIoT platform.
With the potential for some overlap in capabilities and layoffs already happening at Hitachi Vantara in 2020, staff will be watching management strategy post-buyout closely.
GlobalLogic is a full-lifecycle product development services company with 20,000+ employees in 14 countries and 30 engineering centres. It boasts “chip-to-cloud software engineering expertise and vertical industry experience” to help its 400+ customers build digital generation products and digital experiences across verticals.
It has worked with MacDonalds, Reuters, and Qualcomm, to name just three customers — respectively on omnichannel ordering technology; an iPad application; and a prototype application for the company’s Snapdragon Sense ID ultrasonic fingerprint recognition system
“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’s IoT suite], the company said March 31. Hitachi shares fell 7% in Tokyo on the news.
GlobalLogic, founded in 2000, is majority owned by CPP Investments and Partners Group, which have 45% interest each, with management holding the remainder. Hitachi will by the shares from GlobalLogic’s existing shareholders and place the company in its US-focused Hitachi Global Digital Holdings (HGDH) group.