HCL Axon buys UCS Group's SAP operation

Bangalore: HCL Axon, an arm of HCL Technologies bought the SAP practice of South Africa based UCS Group for an initial payment of $7.7 million.

According to the statement of HCL Technologies, the deal also includes payments to UCS Group over the next two years based on the acquired operations' performance. The total deal cost could go up to $18.5 million. The effective date of this transaction is August 1, 2009 after fulfillment of conditions precedent to this transaction.

Commenting on the partnership, John Bright, CEO, UCS Group said, "UCS Enterprise Solutions SAP practice has a pre-eminent local market position and an international profile based on strong Tier 1 retail SAP expertise. We believe that combining the enterprise solutions division with HCL Axon, the world's largest implementation services business purely focused on SAP, offers access to a wider skills base, exposure to other leading retailers and a seamless service offering from both partners."

The carve-out will deepen HCL AXON's SAP capabilities with best-in-class SAP Retail Industry Solutions (IS) , will bring proven competency in IS retail and further increase the global delivery capabilities, including a significant boost to the company's market presence in South Africa. Steve Cardell, President, HCL Axon said, "We have a stated strategy to bring strong customer focused vertical propositions and have identified the retail market as a major opportunity."

HCL Technologies had earlier bought U.K. based Axon Group in a bid to augment its enterprise-software capabilities. It integrated Axon with its own enterprise-software business and named it HCL AXON.

Bright said, "The Indian company will have to pay up to another ZAR53 million by July 31, 2011, if the business meets another revenue target by then. The two companies have also agreed that the key employees of UCS Group's SAP operations will resign and then join HCL AXON. HCL AXON has 4,700 employees and the SAP division of UCS has 67 employees.