Hitachi Ltd is buying US digital engineering services company GlobalLogic Inc for $9.6 billion, the Japanese industrial, electronic and construction conglomerate said Wednesday.
Tokyo-based Hitachi said the acquisition of the Silicon Valley company will strengthen Hitachi’s digital operations in a wide range of businesses, including IT, energy, industry, and mobility. It will speed up efforts in the digital transformation of railways, energy, and healthcare systems that are core Hitachi businesses, it said.
Founded in 2000, GlobalLogic has more than 20,000 employees in 14 countries, and serves more than 400 clients in various industries including automotive, healthcare, and technology, according to its websites.
The company is privately owned by Canada Pension Plan Investment Board, Partners Group AG and other individuals, including GlobalLogic executives. Its revenue expected to reach about $1.2 billion for fiscal 2021.
Together, we will create new social, environmental, and economic value for our globally expanding client companies and elevate QoL, or quality of life, for people through contributions to realise a sustainable society, said Hitachi Chief Executive Toshiaki Higashihara.
Hitachi’s shares plunged 7.3 percent in Tokyo trading.
The deal was expected to close by the end of July 2020, subject to regulatory approval.
Companies around the world are working to adapt to the rapidly digital changes going on in various industries.
The acquisition of GlobalLogic is part of Hitachi’s 2021 mid-term plan, which includes a commitment to invest one trillion yen ($9 billion) to strengthen the digital capabilities of the company’s sprawling businesses.
Hitachi is also in talks with private equity firms to sell Hitachi Metals Ltd, a deal that could fetch more than $6.4 billion, following the sale of its chemical unit and diagnostic imaging business.
In another development, the Japanese firm and American Swiss biotech company Sophia Genetics have announced that they have entered into a long-term collaboration agreement to bring clinical, genomic, and real-world insights to healthcare providers, pharmaceutical and biopharmaceutical companies, and extend the democratisation of data-driven precision medicine globally for the benefit of patients.
(Disclaimer: Additional background information has been added to this PTI copy for context)