UPDATED: HCL Tech acquires eight software products from IBM for $1.8bn (Part 1)
HCL Tech will acquire eight software products from IBM for $1.8bn. The company is taking over several brands Unica (marketing automation), Commerce, Appscan (static code analysis), Lotus and Domino, and lesser known products such as BigFix, Connections, and Portal). Those products are not all new to HCL Tech: the company had already an IP partnership for five of these products.
This is a change in the mode three strategy of HCL Tech, which had relied mostly on an IP strategy (with the significant exception of Actian). This is also a substantial transaction in terms of scale, and is Indian IT’s second-largest acquisition ever, after that of TriZetto by Cognizantª in 2014 for USD 2.7bn. HCL Tech is executing on its strategy and is taking mostly a middleware focus, with exceptions (Unica, Commerce).
From an IBM perspective, the company is following the same route as HPE and is divesting all of its software products outside of cloud, security, analytics, supply chain, and blockchain, and outside of IoT, healthcare, and financial services. The limits of this strategy are not that clear since IBM is divesting Appscan and BigFix.
The deal should be finalized next year.
We have provided additional light about the deal in two subsequent blogs:
and the conclusion HCL Tech and IBM (Part 4) A right move?
ª Several readers pointed out that Cognizant is headquartered in New Jersey, US. Good point. We still consider Cognizant, and firms such as Syntel and iGATE as Indian firms although listed in the US. Next time, we will make sure to clearer!