HCL Tech plummets over 4 per cent on acquisition of IBM products

The shares of HCL Technologies plummeted 4.20 per cent during Friday morning’s trading session as the company announced that it would be acquiring select IBM software products for $1.8 billion. Once the required regulatory reviews are concluded, the transaction will be closed around mid-2019. 

The software products in question, which represent an addressable market of over $50 billion, include Appscan, BigFix, Unica, Commerce, Portal, Notes & Domino, and Connections. HCL and IBM have an ongoing IP partnership for five of these products. 

The products being acquired by HCL are part of a large growing market areas, such as security, marketing and commerce – all of which are strategic segments for the company. The management commentary highlighted the lucrative prospects offered by these products as they strongly believe them to showcase a good growth trajectory on the back of consistent product innovation, strong client focus and product development. 

The large-scale deployment of these products will expand HCL’s reach to thousands of global enterprises spread across a wide range of industries and markets. 

On Friday, the shares of HCL Technologies opened at Rs 1,001, and hit a high and low of Rs 1,001 and Rs. 935, respectively. At 11:36 am, the stock was trading at Rs. 951, down by 6.02 per cent.