New Delhi, Dec. 22: HCL Technologies has divested its 50 per cent stake in HCL Perot Systems (HPS) for $105.3 million to its joint venture partner. Perot Systems bought the holding in an all-cash deal that will make the company a 100 per cent subsidiary of the US firm.
HPS’ assets included approximately $45 million of cash and short-term investments as of November 30, 2003. The company based in Noida has more than 2,000 associates.
Perot Systems and HCL formed the joint venture with a combined capital investment of $4.5 million in 1996. For the first nine months of 2003, HPS reported $78.7 million revenue and $9.3 million net income.
Commenting on the agreement, Shiv Nadar, chairman and CEO of HCL Technologies, said: “By this equitable agreement arrived at with Perot Systems, we also resolve channel and brand conflicts. It will help both partners to pursue goals independently.”
Over 27 years, HCL has opened and closed partnerships with the likes of Hewlett Packard, Deutsche Bank, British Telecom, Deluxe Corporation and Perot Systems.
“They have all brought value to the stakeholders during their tenure. At an appropriate time, some of these partnerships have been amicably concluded by one of the partners inheriting complete ownership of the joint ventures. In continuation of this practice, both HCL and Perot Systems arrived at an understanding that all stakeholders will be best served with a single parent ownership,” said an HCL statement.
Both HCL and Perot Systems had been in discussions over the last several months to arrive at an amicable conclusion.
HPS is an IT services firm specialising in business transformation and application outsourcing. HPS currently serves customers in the UK, Singapore, Switzerland, Luxembourg, Germany, India, Thailand, Malaysia, Japan, Australia and the United States.
HPS is focused on offering-high quality services and has premier quality certifications, including SEI-CMM Level 5, People-CMM Level 4, and CMMI Level 5.
Ross Perot, Jr., president and CEO of Perot Systems, said: “HPS has been an important part of our onshore/offshore delivery model for more than six years. Acquiring HPS was the next logical step in the development of our onshore/offshore application outsourcing model. Not only does this expand our global software team, it also provides us with new clients to serve, and expands our geographic footprint.”
Perot Systems will now consolidate the results of HPS. Prior to completing this transaction, Perot Systems recorded its pro rata share of HPS’ earnings using the equity method of accounting. These earnings were reported in Perot Systems’ income statement on the line titled, “Equity in earnings (loss) of unconsolidated affiliates.”
