Hitachi is to acquire Silicon Valley-based digital engineering services company GlobalLogic for $9.5 billion. The firm will be integrated into the Japanese firm’s Hitachi Vantara unit; its digital engineering capabilities will “strengthen” its Lumada industrial IoT platform, the company said.
Japanese financial paper The Nikkei said the deal is expected to be “the largest acquisition by a Japanese electrical equipment company”. GlobalLogic’s projected revenue for 2021 is $1.2 billion, on an EBITDA margin of “over 20 percent”; the business is targeting EBITDA of $1 billion by 2028.
It employs around 20,000 staff in 14 countries, and claims around 400 customers, including “marquee brands” in the manufacturing, automotive, healthcare, life sciences, and financial services sectors, as well as in communications, technology, and media and entertainment.
GlobalLogic has deep “chip-to-cloud” advanced software engineering technology as well as “experience design skills” and vertical industry expertise. Hitachi said the company “designs and develops innovative software that powers products, platforms, and digital experiences”.
Hitachi has committed to make growth investments of JP¥1 trillion ($9 billion) in the IT sector, primarily through Hitachi Vantara, to strengthen digital capabilities including “digital products, solutions, and partnerships”. It said GlobalLogic will be “an integral part and a growth engine” for its Lumada portfolio.
Hitachi said the pair will “create synergies” by accelerating digital transformation in five sectors: IT, energy, industry, mobility, and “smart life”. The pair will also combine in the company’s Hitachi Astemo automotive systems business. The deal is scheduled to close at the end of July.
Toshiaki Higashihara, president and chief executive at Hitachi, said “The [deal] creates an exciting new opportunity for Hitachi to expand our… Lumada solutions and services, provide value to customers in their digital transformation journey, and grow our Lumada business globally. The synergy of GlobalLogic’s… experience design and innovation with Hitachi’s expertise in IT, operational technology, and products, will help realize our goal to be the leading digital transformation innovator… worldwide. We will create new social, environmental and economic value for… client companies.”
Investment in ‘digital transformation’ is growing accelerating, said Hitachi. It quoted analyst firm IDC, that 65 percent of global GDP will be “digitalized” by 2022, as well as research and advisory company Zinnov, looking at the product engineering sector, which says the total market for digital engineering will grow to $1.1 trillion by 2025, at a compound annual rate (CAGR) of 19 percent.
Shashank Samant, president and chief executive at GlobalLogic, said: “Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life. We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses.”
