HCL to buy Volvo tech wing
HCL Technologies will buy Swedish commercial vehicle major Volvo Group's external IT business for $138 million (around Rs 895 crore) in an all-cash deal.
- Published 21.10.15
New Delhi, Oct. 20: HCL Technologies will buy Swedish commercial vehicle major Volvo Group's external IT business for $138 million (around Rs 895 crore) in an all-cash deal.
Volvo Group will also outsource its IT infrastructure operations to HCL Technologies for an undisclosed contract value for five years.
Volvo Group and HCL have signed a letter of intent, awaiting the signing of the final contract, the group said in a statement from Stockholm.
In a filing to the BSE, HCL Technologies said it would be "acquiring from Volvo Group its external IT business relating to provision of IT infrastructure, mainframe service and application operation services for an all-cash consideration of SEK 1.1 billion ($138 million)".
Volvo Group derived revenues of SEK 1.6 billion ($190 million) from external customers during the last 12 months.
HCL further said it had signed a letter of intent with Volvo Group to undertake its infrastructure and operation services. The total contract value, which is for five years, is not disclosed.
As part of the deal, Volvo said: "Approximately 2,600 Volvo personnel globally will be affected by the transaction. They will be given the offer to move over to HCL Technologies and will continue to work closely with their colleagues in Volvo's IT services division."
The transaction is to be closed during the second quarter of 2016 and will provide both cost savings and a capital gain, Volvo said.
In conjunction with the closing of the deal, Volvo Group's operating income and net financial debt are expected to be positively impacted by about SEK 900 million.
Volvo's CFO, acting president and CEO Jan Gurander said: "I am convinced that this will benefit personnel, suppliers and customers."
"An equally important aspect is that we will have a partner who can ensure that the operation of our IT infrastructure is developed in a manner that will enable us to be at the forefront of our industry," Gurander added.
HCL Technologies president & CEO Anant Gupta said the company's engagement with Volvo would give the opportunity to create additional value for "such a forward looking organisation".
The HCL Technologies scrip closed at Rs 864.95, up 0.91 per cent, from the previous close on the BSE.