HCL Axon to acquire SAP practice of UCS Solutions

HCL Axon, a software company implementing SAP and a subsidiary of HCL Technologies, has acquired the enterprise solutions SAP practice from UCS Solutions, part of the South African UCS Group. The acquired division does SAP implementation for retail and wholesale companies. The consideration is $7.7mn plus an additional payment depending on the growth achieved over two years.

The acquisition will give HCL Axon a stronger foothold in South Africa and add to its revenues. The companies have not disclosed the turnover of the business that has been acquired. The transfer will be effective August 1, 2009, after the completion of formalities.

UCS Group claims to be the market leader in providing solutions to the retail market. It has three divisions, retail solutions, infrastructure and investments. UCS Solutions is part of the retail solutions division of the UCS Group. Its revenues in 2008 were R1.23bn rand or $150mn at today’s exchange rates.

The company’s performance has come under pressure both in its domestic and international markets. Its profit during the six months ended March 2009 dropped to nearly a tenth of its level over the same period, a year ago. The UCS solutions’ business gives nearly half of total revenues. The company said that the division’s margins have been affected due to the recession in international markets and exposure to projects which are discretionary or ones that can be postponed.

The SAP implementation business in particular has been affected by deferred and cancelled international projects. It also mentions having secured one large retail project in along with HCL Axon. That partnership has now led to a different role, with HCL Axon buying out UCL’s SAP business.

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