HCL closes in on Geometric

Deal may value company at $150-200 mn, announcement likely in a couple of days

India's fourth largest IT services company, HCL Technologies, has agreed to acquire Mumbai-headquartered engineering solutions company Geometric in a share swap deal that values it at $150-200 million.

The deal was expected to be announced in a couple of days, sources privy to the development said.

HCL will acquire the 31.09 per cent stake held by Godrej Investments and Godrej & Boyce Manufacturing Company along with the stake of founder and Chief Executive Officer Manu Parpia. The Parpia family owns a 6.73 per cent stake in Geometric.

Emails sent to the Godrej group, Geometric and HCL Technologies did not draw a response.

Founded in 1984, Geometric provides services in product lifecycle management, global engineering services and offshore software development solutions. In 2011, Parpia took over the management and the company underwent structural changes to scale up its business. Geometric's revenue in 2014-15 was Rs 1,105 crore.

In 2014, a clutch of private equity funds had shown interest in buying Parpia's stake. The talks fell through over valuation.

For HCL, the deal will strengthen its engineering services capability, a segment that earned the company over $1 billion revenue in 2014-15.

Engineering and R&D services accounted for 18 per cent of HCL Technologies' revenue of Rs 37,061 crore ($5.95 billion), growing at close to 26 per cent.

Other than its relationship with Dassault, Geometric has customers like Volvo and Aerolia, part of the Airbus group.
DEAL CORNER
HCL Tech to acquire stakes of principal shareholders, including the Godrej family and CEO Manu Papria's shares in a swap deal

The deal
Likely to be announced soon, the acquisition is in line with HCL Tech's stated aim to expand its engineering service business

The buyer
HCL Tech is one of the top five engineering and research and development services companies in the world, with annual revenues over $1 billion (Rs 100 crore) from the segment

Other buys
Oct 2015: HCL Tech had acquired Bengaluru-based privately held C2SiS for an undisclosed sum

Feb 2016: HCL had closed the acquisition of Volvo Group's external IT business for around $138 million (Rs 895 crore then)