HCL Tech to buy Geometric in share swap deal

India’s fourth largest information technology company HCL Technologies has said that an agreement has been signed to acquire (through demerger) all of the business of Geometric Limited.

However, the deal does not include the 58 per cent stake that Geometric owns in the joint venture – 3DPLM Software Solutions, with Dassault Systèmes, HCL said on Saturday in a filing to BSE.

The acquisition would take place through a scheme of arrangement which would be subject to the approval of the High Courts at Mumbai and Delhi in addition to the approval of the regulatory authorities, it said.

In consideration of this acquisition, HCL will issue 10 equity shares of ₹2 each to Geometric shareholders for every 43 equity shares of Geometric of ₹2 each held by them. In total, HCL will issue 15,640,546 equity shares of ₹2 each, the company said.

Geometric is one of India’s leading PLM consulting, mechanical engineering and manufacturing engineering services providers.

“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,” GH Rao, President, Engineering and R&D Services, HCL, said.

“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,” he added.

The business that HCL is acquiring, in one of the largest acquisitions in the engineering services space, has more than 60 global clients in the US and Europe, majorly in automotive and industrial engineering segments.

As of December, Geometric employs 2,606 people across 13 global delivery locations in the US, France, Germany, Romania, India and China.

“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,” Manu Parpia, CEO and MD of Geometric, said.

Headquartered in Mumbai, Geometric was incorporated in 1994 and is listed on the Bombay and National Stock Exchange. For the financial years ended March 2014 and March 2015, the revenues were ₹787 crore and ₹814 crore respectively.

For the nine–month period ended December 31, the revenues were ₹673 crore. The transaction is expected to be accretive on cash earnings per share.

HCL’s shares closed at ₹820.70 on the BSE on Friday, up 0.80 per cent from the previous close, while Geometric’s shares closed at ₹196, down 4.30 per cent from the previous close.

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