The Hindu Business Line : Infosys pulls out of race for Axon

New Delhi/Bangalore, Oct. 10 With Infosys Technologies bowing out of the race to acquire UK-based SAP consulting firm Axon Group, HCL Technologies on Friday decided to implement its £441-million cash offer through a ‘Scheme of Arrangement’ which Axon will post to its shareholders around October 24 with completion expected before the year-end.

The scheme of arrangement by HCL EAS Ltd (an indirect wholly owned subsidiary of HCL Technologies Ltd) would be conditional upon approval by 75 per cent of Axon shareholders present and voting.

“The acquisition would be conditional upon the scheme becoming effective by no later than February 28, 2009, or such later date as Axon and HCL EAS may, with the consent of the Panel agree and the Court may allow,” a communication from HCL said.

Sources said HCL’s move to convert the offer into a scheme of arrangement would ensure that no minority shareholders are left out. “What has been posted today is more of a declaration and Axon will now post the implementation agreement and other documents for its shareholders,” they added. The EGM for Axon shareholders to vote on HCL’s offer is likely to take place within 30 days from posting of the scheme document.

The HCL communication posted on the Axon Web site states that on October 8, HCL EAS had acquired 3,01,623 Axon shares which represent about 0.47 per cent of the current issued share capital of the UK company.

Earlier today, Infosys Technologies said it has decided not to increase its offer price for Axon. Infosys, which first made a bid for Axon late August, had offered to pay 600 pence a share, including the interim dividend. However, Delhi-based HCL Technologies soon entered the fray, trumping that bid with its own offer of 650 pence a share, an eight per cent premium over Infosys’ bid.

In the light of HCL’s higher offer, the Axon Global board – which had initially backed the Infosys’ bid – withdrew its recommendation and supported Delhi-based HCL’s offer to its shareholders.

In a statement today, the Bangalore-based IT giant said, “After careful consideration, the board of Infosys has concluded that it will not increase the price of its original offer.” Infosys said it was confident that its decision would have no material impact on its strategic plans.

“It is for the board of Axon to decide which way to go,” said Infosys at a post-earnings press conference without making any further comments.