Benzinga | Mar 31, 2021 08:18AM EDT

Hitachi To Acquire Digital Engineering Company GlobalLogic For $9.6B

Hitachi Ltd (OTC: HTHIY) subsidiary Hitachi Global Digital Holdings Corporation (HGDH) inked an agreement to acquire GlobalLogic Inc for $9.6 billion (1 trillion yen).

* Hitachi will acquire GlobalLogic Worldwide Holdings through a merger involving HGDH created subsidiary MergeCo H Global Inc (SPC) under the agreement. GlobalLogic Worldwide Holdings will become the surviving company. HGDH will acquire GlobalLogic Worldwide Holdings. Consequently, GlobalLogic Worldwide Holdings and GlobalLogic will become wholly-owned subsidiaries of HGDH.

* The acquisition is part of Hitachi's business portfolio restructuring, including the $7 billion acquisition of ABB Ltd's (NYSE: ABB) power grid business last year and multiple divestments of its domestic hardware subsidiaries.

* GlobalLogic's digital engineering capabilities and client base will help consolidate the digital portfolio of Hitachi's digital solutions and services, Lumada.

* GlobalLogic has 45% stake ownership by Canada Pension Plan Investment Board and Swiss investment firm Partners Group. The company management owns the remaining stake.

* Past GlobalLogic projects include McDonald's Corp's (NYSE: MCD) customer app and in-store digital ordering system and with chipmaker Qualcomm Inc (NASDAQ: QCOM) on a fingerprint recognition system.

* Hitachi plans to fund the transaction with cash and bank loan.

* Hitachi is in talks with private equity firms to divest Hitachi Metals Ltd (OTC: HMTLY) at a deal valued over $6.4 billion upon the sale of its chemical unit and diagnostic imaging business.

* Price action: HTHIY shares closed lower by 1.11% at $97.95 on Tuesday.