Axon Drops Infosys, Goes With HCL

Tuesday, October 7, 2008

The Indian bidding war for UK-based SAP consultancy Axon Group has entered into yet another interesting phase. About a month ago, Infosys Technologies Limited might have thought it had Axon in its kitty when the boards of the two companies had reached an agreement on the terms of a recommended cash offer of 600 pence per share for Axon Group. But HCL last week trumped Infosys' bid for Axon with a cash offer of 650 pence, valuing Axon at about £441 million ($780 million) and countering Infosys' offer valuing the UK firm at around £407 million. Now the bidding tale has taken a new twist, with Axon having withdrawn its recommendation on Infosys offer and deciding to go ahead with the HCL Technologies' cash offer.
As per the implementation agreement with Axon, Infosys had 60 hours to make a counter bid and that period has now lapsed. According to Axon, "Under the terms of the agreement, the company undertook that, in the event of a competing proposal being received from a third party, the board would not vary or amend its recommendation of the Infosys offer for a period of 60 hours from the time Infosys was notified of the competing proposal. The 60-hour period during which Axon is prevented from varying or amending its recommendation has now elapsed."

In the last statement from Infosys made on 26 September 2008, the company said it was "considering its position and urges Axon shareholders to take no action at this time. A further announcement will be made in due course."

Turning its back on a takeover by Infosys, the British information technology company said it intends unanimously to recommend the HCL Offer when it is made.

Axon said, "Axon and HCL have enjoyed a long-standing relationship. The board is pleased that HCL has recognised the quality of the Axon business and has announced its intention to make an offer. The HCL offer values Axon's existing issued and to be issued (fully diluted) share capital at approximately £441 million. The value of the HCL offer is at a premium of 8.3 per cent to the value of the Infosys offer."

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