Axon Group shares rise on counterbid buzz

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New Delhi, Bangalore, Mumbai, Aug 26: possibly bid, but the Infosys offer is the only one on the table and the one the management are backing,” Cardell told Reuters.

He said the 600 pence a share offer from Infosys was ‘a good price’, but acknowledged some shareholders may be disappointed after the shares hit a high of 955 pence earlier in the year. “Six hundred pence is still a 33% premium to the average price of the stock over the past six months and it’s in cash,” he said. Kapil Dev Singh, country manager, IDC India, said, “Considering that valuations have come down in the last few quarters, the valuation by Infosys is good. The price by earnings ratio is 20, which means that for a bottomline of Rs 1.6 billion they are paying Rs 32 billion. Compare that with the P/E ratio of some of the companies listed here and it is way below.”

About whether Infosys should up the price in the event of a counter bid, he said, “It depends on how much Infosys is willing to pay for it and how desperately they need it. Just because they are sitting on a huge cash flow doesn’t mean that they will splurge.”

Frank Hancock, MD, ABN AMRO Asia Corporate Finance, said that given the growth profile of the company, it is a ‘decent’ price that Infosys has offered. However, he added, “It’s possible that another bid will emerge for the company.” But Sudin Apte, senior analyst- Forrester research, exuded optimism. “The deal is neither too small to be inconsequential, nor mammoth one impossible to manage,” he said. “Forrester believes that the deal, involving more than 2,000 people and continuation of current Axon management, will not fall apart at least on the ground of high leveraged and client-connected staff leaving,” he said.