Tokyo (SCCIJ) – Japan’s largest industrial conglomerate Hitachi is acquiring Silicon Valley-based software provider GlobalLogic, a leader in digital engineering services, for $9.6 billion including debt. The Swiss investment fund Partners Group, a member company of the blue-chip Swiss stock market index SMI, is selling its 45% share of GlobalLogic to Hitachi. For the Japanese group, it is the second multi-billion-dollar M&A deal with a Swiss company after purchasing the power grid division of Swiss group ABB last year for 6.9 billion dollars.
Driving foreign sales
With the largest acquisition in its history, the Japanese group wants to drive its IT sales abroad. Hitachi has been focusing on the “digital transformation” of railroads, energy, and healthcare systems for a decade, and is divesting most other businesses. Pure IT sales in the fiscal year 2020 are expected to account for about a quarter of the group’s revenue. But so far, 70% of that revenue has come from Japan.
GlobalLogic has over 20,000 professionals and other personnel operating from 30 engineering centers and eight design studios spanning four continents. It wants to generate $1.2 billion in revenue in the current fiscal year. Its customers include 400 U.S. companies, among them telecom provider T-Mobile, chipmaker Qualcomm, and the fast-food chain McDonald’s, as well as international companies such as carmaker Volvo.
The Japanese industrial giant hopes the acquisition will bring new customers for its own IT systems. “The goal of this acquisition is to advance our Lumada platform for the Internet of Things and accelerate global business,” said President and CEO Toshiaki Higashihara. The CEO justified the purchase price by citing GlobalLogic’s organic growth potential and expected synergies. The acquisition is expected to be completed by the end of July and will be financed with cash as well as loans.
Largest Swiss equity investor
Partners Group from Zug, Switzerland, had acquired GlobalLogic alongside equity partner Canada Pension Plan Investment Board at an enterprise value of USD 2 billion in 2018, each holding a share of 45%. The management of GlobalLogic owns the remaining shares. Under Partners Group and CPP Investments’ ownership, GlobalLogic has completed four strategic acquisitions, including three in Europe.
Over the last three years, the Swiss equity investor also increased the size of the company’s top accounts, many of which are global marquee brands, and introduced a more targeted sales strategy in certain customer segments, including the development of a private equity-focused sales channel. More than 7,000 additional software designers, engineers, and data experts were hired.
Partners Group is a Swiss global private equity firm with 109 billion dollars in assets under management in private equity, private infrastructure, private real estate, and private debt. The Group employs about 1,500 professionals across 20 offices worldwide, among them Tokyo, Shanghai, and Seoul. Headquarters are in Zug, Switzerland. Since September 2020, Partners Group belongs to the Swiss stock index SMI, comprising the 20 largest Swiss stocks.