HCL set to take over Axon, Infy offer rejected

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London/New Delhi, October 2:: British consultancy major Axon Group decided on Thursday to go ahead with a 441-million pound acquisition offer from HCL Technologies, while withdrawing its support to a smaller bid from another Indian IT major Infosys.

Noting that the HCL offer is at a premium of 8.3 per cent to Infosys' bid, worth 407.1 million pounds, Axon said in a regulatory filing in London that its board "has withdrawn its recommendation of the Infosys Offer and intends unanimously to recommend the HCL Offer when it is made".

When contacted, an Infosys spokesperson in India said that the company was evaluating its options and would announce any further move at an appropriate time.

HCL officials said that they were confident of winning over the support of Axon board for its offer. India's second largest IT firm Infosys had announced on August 25 a recommended cash offer of 600 pence per share for Axon Group.

Axon had subsequently posted the scheme documents regarding Infosys offer to its shareholders on September 20. However, HCL Tech announced on September 26 its intention to counter the bid from its bigger Indian rival Infosys with a cash offer of 650 pence per share for Axon.

Axon had entered into an implementation agreement with Infosys, under which it 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," Axon said on Thursday.

"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 UK firm said.

"The HCL Offer values Axon's existing issued and to be issued (fully diluted) share capital at approximately 441 million pound," it noted.

Announcing its intention to recommend an HCL offer when it was made, Axon said that "a further announcement will be made when appropriate".

In case Axon's shareholders decide to go with HCL's offer, Infosys stands to be paid one per cent of the deal amount as inducement.

After HCL offer, Infosys had said on September 26 that it was considering its position and had urged "Axon Shareholders to take no action at this time".