HCL Tech offers 441.1 mn pounds bid for Axon

HCL Tech offers 441.1 mn pounds bid for Axon
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First Published: Mon, Sep 29 2008. 10 59 AM IST
Updated: Mon, Sep 29 2008. 10 59 AM IST
London: Indian software services firm HCL Technologies launched a rival £441.1 million ($810.8 million) bid for Axon Group Plc, sending shares in the British company sharply higher on hopes of a bid battle.
HCL’s offer to pay 650 pence in cash for each Axon share compares with a bid of 600p from India’s Infosys Technologies that valued Axon at around £407 million.
Both offers include Axon’s interim dividend.
“We see Axon as ... (a) transformational opportunity for HCL to become a significant player in the SAP services space,” HCL Chief Executive Vineet Nayar said in a statement on Friday.
In New Delhi, HCL said it planned to fund its bid through a £400 million pound loan and from cash in hand.
The British company welcomed HCL’s announcement.
“Axon and HCL have enjoyed a long-standing relationship and, following a period of due diligence, the board is pleased that HCL has recognised the quality of the Axon business and has decided to announce its intention to make an offer,” Axon said.
Axon also said in a statement it had previously agreed with Infosys that a period of 60 hours would elapse before its board meets to consider all the proposals received. Axon was notified of the HCL proposal on Friday.
Indian outsourcing firms like Infosys and bigger rival Tata Consultancy Services are expanding in Europe, Asia, the Middle East and Latin America to cut dependence on the US market, which accounts for more than half the sector’s revenue.
HCL earns around 29% of its revenues from Europe.
Infosys said it was considering its position in light of the announcement from HCL and urged shareholders to take no action.
“I suppose they (Infosys) will walk away,” said Tejas Doshi, head of research at Sushil Finance in Mumbai. “They are a very conservative company.”
Doshi said the rival bid from HCL highlighted the need for Indian companies to diversify into different service lines and geographies amid a slowdown in their key US market.
If completed, the deal would represent the largest overseas acquisition by an Indian information technology services firm.
When Infosys, India’s second-largest software services exporter, agreed to buy Axon in August, shares in the British computer software company climbed above the then 600p offer price on hopes of a counterbid.
Shares in Axon closed up 7.6% at 682 on Friday, well above the 650p a share offered by HCL.
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First Published: Mon, Sep 29 2008. 10 59 AM IST
More Topics: Axon | HCL Tech | Bid | Infosys | UK |