Thread regarding Hitachi Vantara layoffs

GLobalLogic Deal Closing

No surprises, it looks like the deal is going to close this month - https://markets.businessinsider.com/news/stocks/hitachi-completes-acquisition-of-globallogic-1030603667

Two interesting things I noted - there is no mention of
1) Vantara in the press release at all
2) the $9.6B purchase price

The Vantara folks kept talking about synergies, but they aren't in the conversation. And everything from March mentioned the price/value that made no sense at all.

This was from March 31 (https://www.prnewswire.com/news-releases/hitachi-to-acquire-globallogic-a-leading-us-based-digital-engineering-services-company-301259254.html)

GlobalLogic's revenues are expected to reach approx. 1.2 billion U.S. dollars (approx. 129.6 billion yen5) with adjusted EBITDA6 margins to be over 20% in fiscal 2021. With a high profitability profile and strong revenue CAGR, GlobalLogic will aim to achieve adjusted EBITDA of over 1 billion U.S. dollars (approx. 108.0 billion yen) by fiscal 2028.

So Hitachi paid $9.6B for a company that is expected to do $1.2B in 2021? And the plan here is to take $240M in EBITDA in 2021 and grow that 4x in the next 7 years? It sounds like Hitachi paid for what they hope GlobablLogic will be in 2028.

by glad i exited
| 4451 views | | 7 replies (last July 31, 2021) | Reply
Post ID: @OP+1bP7rVho
Comment! It's anonymous!

7 replies (most recent on top)

If GlobalLogic were to present their business plan on Shark Tank, you would hear “I’m out!” from every potential investor.

by I’mOut
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Post ID: @jtkz+1bP7rVho

Paying 37 times the EBIDITA is slightly worrisome but otherwise Global Logic is not your typical cheap coding and body shop. It has over the years acquired many companies that develop software for manufacturing. So in that sense it's quite a fit for Hitachi's overall vision. Do note that they are heavily disinvesting in heavy and chemical segment and wish to focus on IT in the future. So i guess a company like Global Logic is key to such plans. The Canadian pension fund and Partner group from Switzerland are already winners though having got such massive returns on their investment.

by Anonymous
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Post ID: @hgut+1bP7rVho

any news on how GlobalLogic and Vantara are going to fit together?

by Anonymous
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Post ID: @gubn+1bP7rVho

I think Hitachi has made similar mistake like old HP did, by buying Autonomy or $10+ billion. Buying not a well known company with large number of employees, never produced a positive outcome for the company/employees. It only filled the pockets of a few greedy executives who made the decision for their best interest than general good.

by Anonymous
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Post ID: @8jnu+1bP7rVho

How come none of our customers have ever heard of a company called GlobaLogic? Where and who are the 20K employees? What is there product or service? When you pay 9.6B dollars for a company nobody know anything about, you’ve wasted your money on garbage.

by Susan Backer
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Post ID: @3pwp+1bP7rVho

This sounds like a kick back tbh. Most likely had a friend who was in that company and convinced the company to buy it because of the relationship he had with them. Really suspicious.

by Anonymous
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Post ID: @2lby+1bP7rVho

Apparently not! Hitachi thought they were buying a software company with strong IP portfolio. GFK really picked a loser. Surprised deal closed as they knew they bought a dud.

by Anonymous
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Post ID: @2gfv+1bP7rVho

The valuation numbers for GlobalLogic only make sense if they are bringing a ton of IP to Hitachi. I know a few years ago GlobablLogic was purely focused on outsourced (and mostly offshore) product development, but I expect they've developed IP that is influencing this valuation.

by Anonymous
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Post ID: @piy+1bP7rVho

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