HCL makes an all-cash counter bid for Axon

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New Delhi, Sep 26 : India’s fifth-largest software-services company, HCL Technologies has made an all-cash counter bid for UK based-SAP consulting company, Axon Group Plc, for which Infosys had made an offer in August. HCL has valued the company at 441.1 million pounds, which means that Axon shareholders will receive 650 pence in cash for every Axon share.

Infosys Technologies had valued the company at £407.1 million offering 600 pence for each Axon share. “We plan to fund the acquisition by a loan of 400 million pound and the rest will be funded through the company’s cash reserves,” said Vineet Nayar, CEO, HCL Technologies.

HCL has cash reserves of $560 million.

On the other hand, Infosys Technologies’ CEO S Gopalakrishnan said the company will evaluate its options before making a counter bid. “We came to know about the counter offer in the evening. We will evaluate the option, which is -- to bid or not to bid,” said Gopalakrishnan.

Citing the various synergies between HCL and Axon, Nayar said that he sees “HCL in Axon” and the deal will help the company expand its presence in the SAP vertical, which is one of the focus areas for it.

“One of the biggest advantages of Axon is that the company gets 60-70% of its revenues from the top few customers,” said Nayar. He added that given HCL’s diverse portfolio, the two will be able to have multi service relations with the clients.

With revenues of 204.5 million pounds in 2007, Axon has a strong presence in the UK.

According to Nayar, Axon will help HCL strengthen its presence in the UK (currently around 29% of its revenue comes from UK). “We have been interacting with the Axon management since July and the outcome looks positive,” said Nayar.

In the last one year, HCL Technologies has made three acquisitions —Capital Stream, Liberata Financial Services and Control Point Solutions. However, the Axon deal will mark the biggest overseas acquisition by India Inc in the information technology sector.