GlobalLogic Acquisition: Key Details, Impact, and What Comes Next

Hitachi Ltd.'s acquisition of GlobalLogic Inc. for $9.6 billion marks a significant move in the tech industry. This strategic acquisition aims to enhance Hitachi's digital capabilities, particularly in its Lumada business, and accelerate digital transformation across various sectors. The integration of GlobalLogic's expertise is expected to create synergies and expand Hitachi's global reach.

What Is GlobalLogic?

Founded in 2000, GlobalLogic specializes in digital product engineering services and platforms. The company offers a comprehensive range of services, including Product Strategy & Experience Design, Digital Business Transformation, Intelligence Engineering, Software Product Engineering, Technology Modernization, and Embedded Engineering & IT/OT Transformation. GlobalLogic differentiates itself with AI-powered and human-driven engineering, extensive industry expertise, and a global presence in 25 countries, impacting billions of lives through its innovative solutions.

Who Acquired GlobalLogic?

Hitachi is a global leader in digital innovation and sustainable solutions, addressing social challenges through technology and partnerships for over 110 years. The company offers a diverse range of products and services, including digital transformation, energy solutions, mobility systems, industrial equipment, healthcare technologies, and building systems. Hitachi's influence spans multiple sectors, positioning it as a key player in driving global sustainability and social innovation efforts.

When Was GlobalLogic Acquired?

Hitachi completed its acquisition of GlobalLogic on July 14, 2021, following an announcement on March 31, 2021. This acquisition aligns with the growing trend of digital transformation across industries, accelerated by the COVID-19 pandemic. Companies are increasingly investing in digital engineering services to enhance their capabilities and stay competitive. The timing of this acquisition reflects Hitachi's strategic focus on expanding its digital solutions, particularly through its Lumada business, to drive global digital transformation.

Why Was GlobalLogic Acquired?

• Market Expansion: The acquisition will enable Hitachi to expand its core Lumada digital solutions business globally. By integrating GlobalLogic's expertise, Hitachi can enhance its market presence in sectors like IT, energy, industry, and mobility. This strategic move allows Hitachi to address the growing market for digital innovation and promote the global expansion of the Lumada business.
• Technology Integration: GlobalLogic’s advanced digital engineering capabilities, including "chip-to-cloud" software product engineering and experience design, will be integrated with Hitachi’s Lumada portfolio. This integration aims to drive digital transformation in social infrastructure such as rail, energy, and healthcare, leveraging the power of Operating Technology (OT), Information Technology (IT), and IoT/Digital Engineering under one umbrella.
• Competitive Advantage: The acquisition enhances Hitachi’s ability to deliver on its strategy to promote Social Innovation Business through digital technology. By combining the talent and experience in domain and digital from both companies, Hitachi aims to become a global leader in the social innovation business, accelerating the digital transformation of social infrastructure and providing greater value to clients and society.

Acquisition Terms

• Acquisition Price: $9.6 billion
• Payment Method: The transaction was executed through a "reverse triangular merger method," where a subsidiary of Hitachi provided cash to the shareholders of GlobalLogic Worldwide Holdings. The total acquisition cost includes $8.5 billion for the company's shares and $1.1 billion to pay off its debt.
• Key Conditions or Agreements:
  • The transaction is subject to customary conditions and regulatory approvals.
  • The acquisition was expected to be completed by the end of July 2021.
  • Hitachi Global Digital Holdings LLC, a U.S. subsidiary of Hitachi, acquired 100% of the outstanding shares of GlobalLogic Worldwide Holdings, Inc.
  • Financial advisors for the transaction included Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC.
  • Legal advisors included Shearman & Sterling LLP for Hitachi and Kirkland & Ellis LLP for GlobalLogic.

Impact on GlobalLogic

The acquisition of GlobalLogic by Hitachi has led to significant changes in operations and management. GlobalLogic is now a wholly-owned subsidiary of Hitachi Global Digital Holdings LLC, facilitating closer collaboration between the two companies. This integration aims to leverage GlobalLogic's digital engineering expertise to enhance Hitachi's Lumada digital solutions. Additionally, Srini Shankar has been appointed to a leadership role, signaling a strategic shift to align with Hitachi's broader digital transformation goals.

In terms of product offerings and services, the acquisition has bolstered Hitachi's capabilities in digital transformation, particularly in sectors like rail, energy, and healthcare. The integration of GlobalLogic's advanced digital engineering services with Hitachi's Lumada portfolio is expected to create new solutions and expand the Lumada business globally. While specific employee and customer reactions are not detailed, the strategic benefits suggest a positive outlook, with enhanced digital solutions and greater value for clients. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.