HCL Technologies has signed an agreement to buy Germany-based IT and engineering services provider, H&D International Group, as part of its long-term growth plan in the country and give it access to the automotive sector.
The deal will provide in-country front office and delivery capabilities, HCL said in a statement.
The company did not disclose a deal value.
As part of the deal, H&D’s existing delivery center in Gifhorn, Germany, will become part of HCL’s global delivery footprint and will focus on IT and engineering services both in Germany and globally.
“Germany is a critical market for HCL as we continue to expand our business in Europe," said Ashish Gupta, Corporate Vice President at HCL Technologies. "We feel the German market is at an inflection point and it is the right time for HCL to expand and make significant investments here. H&D has a long-standing track record of high-quality service delivery and we are confident this will play a significant role in our continued growth in Germany,” he added.
Founded in 1996, the H&D International Group is one of the largest IT service providers in the German automotive industry and operates in over 20 locations globally including Germany, the United States, Czech Republic and Poland. It has 1,400 employees.
"H&D’s revenue for FY17 (December-ending) was 74.1 million euros. As per the announcement, the transaction would accelerate HCL Tech’s growth in Germany in the IT and engineering service segment," said IIFL in a note on Wednesday.
The note added that a decline in H&D's revenues from 86 million euros in FY15 to 74 million euros could have led to the attractive price to sales multiple of 0.4 times.
H&D specialises in IT Infrastructure, application services particularly in R&D IT, shop floor IT and Industry 4.0 solutions and has extensive expertise in SAP, computer-aided technologies, engineering services and customer-specific product development.
“By combining H&D’s delivery capabilities with those of HCL, we have an unprecedented opportunity to add tremendous value to the services we provide to support our clients’ IT transformation ambitions," said Bernhard Hönigsberg, CEO of the H&D International Group.
The Europe business accounted for 28.8 percent of HCL's annual revenue and rose 9.7 percent for HCL in the year ended March 31.
“HCL already has a strong presence in Germany and the automotive sector with its purchase and integration of Volvo IT and Geometric Software. Its investment in H&D strengthens its capabilities and positioning even further in two crucial regions," said Klaus Holzhauser, Managing Director of leading independent European research and consulting firm, Pierre Audoin Consultants (PAC) Germany.
He added that H&D has established a strong footprint in the German and Central European automotive markets and is the IT services provider to one of Germany’s biggest car manufacturers.
According to a presentation on H&D's website, it services the IT system of, the Volkswagen group, which is one of the largest automakers in Europe.
HCL had acquired the external IT business of Volvo in 2016, for USD 1 billion, and had said it was open to more such deals to increase its local presence in the European region.
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