Infosys is acquiring Axon Group plc (LSE: AXO), a leading UK-based SAP consulting company. Founded in 1994, Axon provides consultancy services to global companies that have chosen SAP as their enterprise platform. The company focuses on technology-enabled transformation programs by leveraging its in-depth industry expertise and functional knowledge.
Infosys’ acquisition of Axon valued at £ 407.1 million (INR 33.1 billion; US$ 753.1 million) is expected to be completed by November 2008. Axon has 2,000 employees located at offices in United Kingdom, North America, Malaysia, and Australia. For the year ended 31 December, 2007, Axon reported profit after taxation of £ 20.2 million (INR 1.6 billion; US$ 37.4 million) on revenue of £ 204.5 million (INR 16.6 billion; US$ 378.3 million).
The deal would close at the end of November this year. The payment would be made in December, and it would add to earnings from January 2009, India’s second largest IT services provider said.
Last year this month, Infosys’ competitor Wipro announced the acquisition of Infocrossing, a US-based services provider for about $600 million. Infocrossing’s annual revenues at that time were about $232 million.
Axon to be Delisted
Axon, which is listed on the London Stock Exchange, would be delisted once the deal is completed, Infosys added. Axon, which specialises in SAP implementation and consultancy, has clients across sectors including aerospace, retail, manufacturing and utilities. The company would add about 2,000 employees to Infosys’ strength of about 94,400 employees as of June 2008.
The object of the acquisition is to have global reach, scale and financial strength necessary to participate in deals that are transformational for client’s businesses, said Mr S. Gopalakrishnan, Chief Executive Officer and Managing Director, Infosys. (In short, this means that the combined entity would now be eligible for large deals.)
Mr Gopalakrishnan said this is a space where Infosys sees good growth. There is opportunity in new implementations and also in fuller utilisation of the licences which sit on the shelf, he added.
Axon lacks financial strength and global reach, and Infosys would provide that, said Mr V. Balakrishnan, Chief Financial Officer, Infosys. He later told Business Line that Infosys was sitting on cash of about $1.8 billion. After this acquisition, the company would have roughly a billion dollars.
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