HCL Technologies, the country’s fourth-largest software exporter, on Tuesday said it will buy Swedish vehicles company Volvo Group’s external IT business for $138 million (around ₹895 crore) in an all-cash deal.

The deal will be subject to both the parties entering into binding agreement(s) and regulatory approvals, the company said.

The company said it had also signed a Letter of Intent with the Volvo Group on an outsourcing engagement for its IT infrastructure and operations services. The total contract value is for five years, HCL Tech said, without disclosing the deal amount. The Volvo Group said around 2,600 Volvo personnel globally will be affected by the transaction. “They will be given the offer to move over to HCL Technologies and will continue to work closely with their colleagues in Volvo’s IT services division,” it said.

Cost-saving step

The transaction is to be closed during the second quarter of 2016 and will provide both cost savings and a capital gain, the Swedish conglomerate said.

“I am convinced that this will benefit personnel, suppliers and customers,” Jan Gurander, Volvo CFO, and Acting President and CEO, said. In conjunction with the closing, the Volvo Group’s operating income and net financial debt are expected to be positively impacted by an amount of around SEK 900 million, the company said.

“HCL’s engagement with Volvo is especially satisfying given that we have the opportunity to create additional value for such a forward looking organisation. It is also pleasing to note that skilled personnel will be joining HCL and our culture will further flourish globally,” Anant Gupta, President and CEO, HCL Technologies, said.

Shares of HCL Tech closed at ₹864.95 on the BSE, on Tuesday, up 0.91 per cent from the previous close.

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