- Hitachi moves from hardware to digital services
- Shares fell 7% on the news
- The conglomerate divests itself of non-core assets
TOKYO, March 31 (Reuters) – Hitachi Ltd (6501.T) said on Wednesday it would buy US software company GlobalLogic Inc for $ 9.6 billion, including debt repayment, as the Japanese industrial conglomerate passes from electronic equipment to digital services.
The deal is the largest Japanese acquisition of a U.S. high-tech company on record, according to data from Refinitiv.
The acquisition is part of the ongoing overhaul of Hitachi’s business portfolio, which includes the $ 7 billion acquisition of the power grid business of ABB Ltd (ABBN.S) last year and a series disposals of its domestic equipment subsidiaries.
Hitachi stock fell 7% on the Tokyo Stock Exchange, its biggest daily decline in more than a year, on the news.
San Jose-based GlobalLogic is currently 45% owned by the Canada Pension Plan Investment Board and Swiss investment firm Partners Group. The rest belongs to the management of the company.
Founded in 2000, GlobalLogic has more than 20,000 employees in 14 countries and provides software engineering services to 400 clients active in industries such as automotive, healthcare and finance.
GlobalLogic’s expertise extends from chips to cloud services and will extend the range of Hitachi’s own digital services business, company executives said at a press conference.
GlobalLogic’s past projects include working with McDonald’s (MCD.N) on its customer application and in-store digital ordering system and with chipmaker Qualcomm (QCOM.O) on a fingerprint recognition system, according to his website.
Hitachi aims to complete the transaction, which will be funded with cash and bank loans, by the end of July.
The conglomerate is in talks with private equity firms to sell Hitachi Metals Ltd (5486.T), a deal that could bring in more than $ 6.4 billion, following the sale of its chemical unit and business of diagnostic imaging.
Reporting by Makiko Yamazaki; Editing by Kim Coghill
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