SAP HR/HCM

Offer Update & Change of Recommendation  02/10/2008 

On 25 August 2008, Infosys Technologies Limited (”Infosys”) announced a recommended cash offer of 600 pence per share for Axon Group plc (”Axon” or the “Company”) (including the interim dividend of 2.25 pence announced by Axon on26 August 2008) (the “Infosys Offer”). The scheme document in relation to the Infosys Offer was posted to Axon shareholders on 20 September 2008.

On 26 September 2008, HCL Technologies Limited (”HCL”) announced its intention to make a cash offer of 650 pence per share for Axon (including the interim dividend of 2.25 pence) (the “HCL Offer”). In connection with the Infosys Offer, the Company entered into an implementation agreement with Infosys. Under the terms of this agreement, the Company 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 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 HCL Offer values Axon’s existing issued and to be issued (fully diluted) share capital at approximately £441 million. The value of the HCL Offer is at a premium of 8.3 per cent to the value of the Infosys Offer.

Accordingly, the Board has withdrawn its recommendation of the Infosys Offer and intends unanimously to recommend the HCL Offer when it is made.

Original Source

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.

Original Source