India’s HCL has firepower to stay in race for Axon

India’s HCL has firepower to stay in race for Axon
Comment E-mail Print Share
First Published: Tue, Sep 30 2008. 03 24 PM IST
Updated: Tue, Sep 30 2008. 03 24 PM IST
New Delhi: “India’s HCL Technologies Ltd, which topped a bid by bigger rival Infosys for British consultancy Axon Group Plc, does not want to engage in a bidding battle but has the firepower to lift its offer if necessary,” a company official said on Tuesday.
HCL, India’s fifth-largest software firm, made a £441.1 million offer for Axon on Friday, bettering Infosys’s bid of £407 million and triggering market talk it could set off more counterbids.
“We are not in a bidding war or anything like that,” Sandeep Gupta, HCL’s corporate vice president for finance said, adding the offer was made on the value it saw in Axon.
“Based on data we have today, we have evaluated the value. What data comes in we will evaluate it further,” he said.
Infosys, India’s second-largest software firm with $1.8 billion in cash at end-June, has said it is considering its position in light of the HCL announcement.
HCL has said that it plans to fund the acquisition through a £400 million loan from Standard Chartered Bank and from cash in hand.
Gupta was of the viewpoint that if at all HCL had to raise its bid, it could dip into cash reserves of about $550 million or take another loan.
“We have a solid partner with us who is Standard Chartered. If the situation comes like that (a higher offer) and we find taking a loan is more lucrative for us, I’m sure they will support us,” he said.
Export-driven Indian software firms are looking to reduce their dependence on the wobbly U.S. market, which account for more than half the sector’s revenue.
UK-based Axon helps businesses implement software products from German’s SAP AG, a segment seen as having a strong business potential. The market leader in Britain, it gets nearly two-thirds of its revenues from outside the United States.
Shares in HCL were trading up 1.9% at Rs199.50, after falling 8% on Monday on the counterbid. Infosys was up 1.3% at Rs1,410, rebounding from a 3.9% slide the previous day.
Comment E-mail Print Share
First Published: Tue, Sep 30 2008. 03 24 PM IST