“The Board has withdrawn its recommendation of the Infosys offer and intends unanimously to recommend the HCL offer,” Axon said in a statement on Wednesday after markets had closed. HCL offered to buy Axon for 650 pence a share in cash on September 26, an 8.3 per cent premium to the 600 pence per share offer Infosys had made six days earlier.

Simon Strong, analyst with KBC Peel Hunt, talked of the possibility of Infosys raising its offer price to 700 pence. He also considered Infosys as being the company with greater international reach, and thus capable of providing the best business to Axon. Harit Shah, an analyst with Angel Broking Firm believed HCL to be “more favourably placed”. “Yet, we should not jump to any conclusions. Infosys still has a chance and we cannot assess the situation definitively without considering their reaction,” he added.

Recent reports have also suggested sliding share prices for HCL and Infosys. On Monday, shares in HCL fell by 8.3 per cent and Infosys lost more than 3.3 per cent in a Mumbai market which was down 3.4 per cent.

However, Shah refused to correlate falling share prices with the bidding. “The global financial meltdown is responsible for this and we cannot conclude that share prices have tumbled due to both companies bidding for Axon.” he said.

Meena Vaidyanathan, HCL spokeswoman, said the acquisition would enable the firm to offer cost-competitive, end-to-end services. “The fact that Axon’s strengths are in defensive sectors, like public utilities and transport, which are presently not affected by the slowdown will only help,” Vaidyanathan said. She said it was “too early to speculate” on whether there would be layoffs due to the merger.

8.3%The premium that HCL will pay over Infosys’s bid of 600 pence per share

£441 mnHCL’s bid for Axon Group PLC at an offer price of 650 pence per share. Axon has decided to recommend HCL’s offer

£407.1 mnInfosys’s bid for Axon just six days prior to HCL making its offer. Analysts say Infosys may now hike its offer price to 700 a share