HCL sidelines Infosys in Axon acquisition

03 October 2008

After resisiting HCL Technologies' advances for the last two years, British consulting firm Axon Group has agreed to accept a £441 million ($785 million) bid from HCL Technologies, rejecting an earlier offer of £426.1 million ($753.1 million) by Infosys Technologies (See: Infosys to acquire UK's Axon for $753 million)  as the 60-hour period required to make a counter bid as stipulated in the implementation agreement signed with Axon, had lapsed.

When Infosys first made its offer in August, Axon's board had recommended that holders approve the bid. After it received HCL's counter-bid, Axon told Infosys that it had until the end of the weekend to make a new offer, before its board convenes to reconsider its earlier recommendation and said, ''We will seek to maximise value for Axon shareholders.''

Axon said in a statement on Thursday that ''The board has withdrawn its recommendation on Infosys offer and unanimously intends to recommend the HCL offer when it is made.''

HCL offered to buy Axon for 650 pence a share in cash on September 26, topping the Infosys offer of 600 pence.

Analysts believe that though Infosys has not reacted, a counter-bid at a later date could not be ruled out as the bid for Axon is not being seen as an auction style bidding. Infosys could raise the stakes and make an offer of around 700 pence per share. Analysts say a price of aound 700 pence would be still a good value.

If the deal does go through in HCL's favour, being at a premium of 8 per cent to Infosys bid, then it would be the largest overseas acquisition by an Indian IT company.