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Hitachi to Acquire U.S. IT Company GlobalLogic: Evolving Lumada Business and Accelerating Global Expansion
On March 31, 2021, Hitachi, Ltd. announced that it would acquire GlobalLogic Inc., a leading digital engineering services company based in the U.S. The total acquisition cost, including the repayment of GlobalLogic's interest-bearing debt, is estimated to be 9.6 billion U.S. dollars (approx. 1 trillion yen). Through this acquisition, Hitachi intends to expand its Lumada business. “Lumada” is the collective term for solutions and services that utilize advanced digital technologies to accelerate digital transformation (DX).
At a press conference held on the day of the announcement, President & CEO of Hitachi, Ltd. Toshiaki Higashihara expressed his enthusiasm for the acquisition, saying that "We are carrying out this acquisition in order to evolve Lumada and to accelerate its global expansion. In other words, this acquisition is for creating a 'Global Lumada.' I am convinced that bringing GlobalLogic into our group will make it possible to further evolve Hitachi's Lumada business and allow us to deliver new value to customers around the world."
GlobalLogic is an IT company headquartered in Silicon Valley, United States. As a leading company in the fast-growing digital engineering services market, GlobalLogic possesses software engineering technology for a wide range of products and services, from the chip to cloud. GlobalLogic also has design studios and other sites in 14 countries around the world, including Germany and India, for accelerating collaborative creation with customers, and it has a workforce of over 20,000 employees. It carries out software development for a variety of enterprises and has a customer base of over 400 companies in a broad range of fields, including communications, financial services, automotive, and healthcare.
Placing GlobalLogic under its umbrella is a part of Hitachi's policy for accelerating Lumada-related businesses. In addition to the five sectors of "Mobility," "Smart Life," "Industry," "Energy," and "IT," GlobalLogic will be linked up with automobile components manufacturer Hitachi Astemo in order to accelerate the DX of social infrastructure.
Toshiaki Tokunaga, Executive Vice President and Executive Officer of Hitachi, Ltd., commented as follows on what is to be achieved through Lumada:"Through collaborative creation with customers and alliances with partners, as well as through Hitachi's unique fusion of IT x OT(Operational Technology) x Products, we will use Lumada to provide value to society. We will leverage Lumada to achieve this in such areas as the environment, resilience, and safety and security, as well as to find solutions to social issues and to improve the overall quality of life in society."
Through this acquisition, GlobalLogic aims to achieve an adjusted EBITDA of over 1 billion U.S. dollars (approx. 108 billion yen) in fiscal year 2028. Regarding this, Tokunaga said that GlobalLogic "has continued to exhibit 20+% growth for a long time. In addition to this, using Lumada assets cultivated within Hitachi over the years, together with Hitachi's R&D technologies, we will put this figure well into the achievable range."
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