Axon Group shares rise on counterbid buzz

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New Delhi, Bangalore, Mumbai, Aug 26: A day after Infosys Technologies said it is acquiring British SAP consulting services company Axon Group in an all-cash deal amounting to £407 million, shares of the latter, listed on the London Stock Exchange, soared on Tuesday on expectations of a counterbid.

Axon shares were 20.9% higher at 607.5 pence by 12:19 pm, above the 600 pence a share cash offer, agencies reported. Infosys’ stock, on the other hand, closed 0.32% down on the Bombay Stock Exchange on Tuesday, at Rs 1,697.60.

Some analysts said that they were expecting a counterbid, not just from Indian firms, but global companies too, while some others did not believe so. Gaurav Dua, head research of Mumbai-based broking firm Sharekhan said, “Since Infosys has consent for only 18.8% stake and the rest of the equity is widely distributed between the public and institutions, there is a huge possibility of a competitive bid.” He added that there could be a possibility of Axon getting better bids from not only Indian but also international IT companies.

But Anand Lavi - executive director of investment advisory research company Tholons felt a counterbid was unlikely. The stock price of a company being acquired rising is a common phenomenon, he said. “This company has been on the block through investment bankers for a while. So most Indian and other companies who are interested to shop would have already seen it. Besides, Infosys would be protected, because in the agreement, there is mentions of a 1% price pay back by Axon in case a counter offer is accepted by it,” he added. The only risk - for Infosys’ shareholders - is, how soon and how well Infosys can integrate the transaction, and bring up Axon’s profitability of around 15% to match its own profitability of over 20%, he added.