Aiming global, infosys buys uk co in mega-deal

MUMBAI, AUGUST 25: After pharma, auto and steel companies, now it’s the turn of Indian infotech companies to go for mega acquisitions abroad. In probably the largest overseas acquisition by an Indian infotech company, Infosys Technologies, India’s No 2 software services exporter, has agreed to buy UK-based consultancy services firm Axon Group Plc in an all-cash deal valued at Rs 3,310 crore (around £407.1 million, or $753.1 million).

Infosys, which expects the deal to be completed by November 2008, said the acquisition would “accelerate the achievement of some of Infosys’ current strategic corporate objectives, including the continued expansion in consulting capabilities”. Infosys has offered 600 pence a share for Axon, 19 per cent more than the closing price of 502.5 pence on August 22.

For the year ended December 2007, Axon — which has about 2,000 employees — reported a profit after taxation of £20.2 million (Rs 160 crore) on revenue of £204.5 million (Rs 1,660 crore). Infosys has also indicated about retaining the employees of Axon.

“We are excited about this acquisition. The strategic combination will accelerate the realisation of our common aspiration — that of becoming the most respected provider of business transformational services in the global marketplace,” said Infosys CEO Kris Gopalakrishnan.

Ahead of the announcement, shares in Infosys, which has a market cap of Rs 97,475 crore, ended 0.5 per cent higher at Rs 1,703.05 on the Bombay Stock Exchange that closed up 0.3 per cent. When the deal is closed, Axon would be delisted from the London Stock Exchange, Infosys CFO V Balakrishnan said. Axon has evolved from an implementation consultancy into a full service provider that meets all the business consulting, solutions implementation and applications management needs of large organisations to enable them to successfully deliver major business transformation programmes.

“This acquisition has come at a time when Indian software companies are expanding in Europe, Asia, the Middle East and Latin America to cut their dependence on the US market, which accounts for more than half the sector’s revenue,” said an IT analyst with a domestic broking firm.

Founded in 1994, Axon went on to deliver numerous firsts in the SAP market space including the first to implement business warehouse, strategic enterprise management and eBusiness solutions in the UK. In 2001 Axon acquired leading business consultancy Bywater. In 2005, the firm acquired Feanix Corporation, a leading US business transformation consultancy and has continued its expansion in the US. In 2007, Axon further expanded in the Asia-Pacific region with the acquisition of JSPC. Axon has turned over more than £204 million in 2007.

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