IBM offloads software products to HCL Technologies in $1.8B deal

IBM offloads software products to HCL Technologies in $1.8B deal

Shares an IP partnership in five of the seven products being sold

HCL Technologies has entered into a definitive agreement to acquire some IBM software products in a US$1.8 billion deal.

India-headquartered HCL Technologies and IBM have an ongoing IP partnership for five of the seven products.

Terms of the agreement will see HCL acquire Appscan for secure application development; BigFix for secure device management; Unica (on-premise) for marketing automation and Commerce (on-premise) for omni-channel eCommerce.

In addition, the deal also covers Portal (on-premise) for digital experience; Notes & Domino for email and low-code rapid application development and Connections for workstream collaboration.

The deal is expected to close in mid-2019 and is subject to regulatory reviews. These software products represent a total addressable market of more than $50 billion, according to HCL.

"We continue to see great opportunities in the market to enhance our Mode-3 (products and platforms) offerings," said C Vijayakumar, president and CEO at HCL Technologies. "The products that we are acquiring are in large growing market areas like security, marketing and commerce which are strategic segments for HCL.

"Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts."

According to Vijayakumar, the large-scale deployments of these products provide the services provider with a great opportunity to reach and serve thousands of global enterprises across a wide range of industries and markets.

"I am confident that these products will see good growth trajectory backed by our commitment to invest in product innovation coupled with our strong client focus and agile product development," Vijayakumar added.

"In addition, we see tremendous potential for creating compelling 'as-a-service' offerings by combining these products with our Mode-1 and Mode-2 services."

Meanwhile, John Kelly, IBM senior vice president for Cognitive Solutions and Research said that Big Blue has prioritised its investments to develop integrated capabilities in several areas including AI, IoT, cyber security and supply chain for the past four years.

The company claims to be the market leader in some of those.

"We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as stand-alone products," Kelly said.

"At the same time, we believe these products are a strong strategic fit for HCL, and that HCL is well positioned to drive innovation and growth for their customers."

HCL has recently revealed plans for a major expansion in Australia with the launch of a 150-person office in Melbourne in 2019.

The India-founded software service provider revealed plans to open the IT service centre in April 2019, which will be its biggest base in Australia and New Zealand.

HCL A/NZ country manager Michael Horton told ARN that the company had a customer in Melbourne, which the office would serve, but was unable to divulge further details.

HCL also opened a 50-person services centre in Adelaide to service agribusiness Elders. The company currently employs 1,600 people in Australia.

In late October, IBM unveiled plans to acquire open source specialists Red Hat, in a blockbuster US$34 billion deal designed to bolster the tech giant's hybrid cloud capabilities.

Terms of the deal - unveiled following a weekend of media speculation - will see Big Blue acquire all of the issued and outstanding common shares of Red Hat for US$190.00 per share in cash, in an agreement expected to be finalised in the second half of 2019.

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