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HCL to acquire IBM software products for $1.8 Billion

HCL Technologies has entered into its biggest acquisition till date as it is buying IBM’s software products. The all-cash deal is worth $1.8 billion i.e nearly Rs.12,700 crore. IBM has indeed confirmed that it is selling its software products to Indian firm HCL.

The deal is going to be funded largely through internal accruals. Half of the total amount of the deal will be paid at closer. Speculations are that some of the IBM employees will also be acquired by HCL.

What does HCL get out of this deal?

With this acquisition, HCL Tech will get software products in areas of marketing, commerce, security and collaboration. It is considerably a very profitable revenue stream as it gives HCL access to over 5,000 large clients. These are spread across industries and geographic markets, along with sales and marketing teams.

The software products in the deal include Appscan (for secure application development), BigFix (for secure device management), Unica (for marketing automation), Commerce (for omni-channel eCommerce), Portal (for digital experience), Notes & Domino (for email and low-code rapid application development), and Connections (for workstream collaboration).

“The large-scale deployments of these products provide us with a great opportunity to reach and serve thousands of global enterprises across a wide range of industries and markets,” C Vijayakumar, president and CEO at HCL Technologies

Does the deal work for IBM?

It seems to be a very sensible move for IBM to sell off software like Lotus Notes and Domino. These old software don’t stand a place in the focusing areas of company. IBM is moving in a different direction as it is developing its cloud business. The company wants to embrace private and hybrid cloud deployments. Acquiring the Red Hat in October signifies the company’s intentions.

The deal will close in the middle of next year subjected to the regulatory approval processes. This deal gives HCL the opportunity to continue to build the Notes/Domino business.