Infosys not to raise Axon bid, rival HCL set to make largest overseas IT acquisition
India's IT Bellwether Infosys Technologies said, Friday, it will not be increasing its offer bid for UK-based leading SAP consultant Axon Group Plc., a move that paves the way for rival HCL Technologies, which had trumped Infosys' offer, to acquire Axon.
It may be recalled that on August 25, Infosys had offered to buy Axon for 600 pence a share or £407.1 million ($753.1 million) in an all-cash deal that would help the IT bellwether gain a firm foothold in Europe.
However, on September 26, rival HCL made a surprise counter offer of 650 per share (at a 8.3 percent premium of Infosys' bid) that puts the enterprise value of the SAP consultant at £441.1 million ($816 million), a move which, industry analysts thought, would spark a bidding war.
Shaken by HCL's move, Infosys urged Axon shareholders not to take any immediate decision on HCL's offer and added that it was considering its position.
However, after the elapse of 60-hour period during which Axon is prevented (by Infosys) from varying or amending its recommendation, the SAP consultant said its "board has withdrawn its recommendation of the Infosys offer and intends unanimously to recommend the HCL offer when it is made."
After maintaining an uncomfortable silence for over a week, Infosys said in a statement on Friday that "after careful consideration, (it) has concluded that it will not increase the price of its original offer."
The IT firm said it "has a fast-growing and profitable SAP-led business transformation practice" and is confident that "its decision will have no material impact on its strategic plan."
According to Infosys CFO V. Balakrishnan, Infosys sees no reason to increase its bid. "We have done our homework before we gave the offer. We believe that our offer was fair and we don't find any need to increase the price keeping in mind the due diligence that we did and also the environment," he said.
Infosys counts ABN AMRO, Goldman Sachs, Philips Electronics, BT Group Plc. and Citigroup among its clients.
Close on the heels of Infosys' announcement, HCL said in a regulatory filing that it would pursue in its objective of acquiring Axon by way of a scheme of arrangement.
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