Indian tech giant snaps up UK’s Axon
Indian software services giant Infosys yesterday said it had agreed to buy the London-listed IT consultancy Axon in a deal worth £407.1m – the largest ever takeover of a technology firm by an Indian player.
Infosys, India’s second largest software services firm, offered 600p a share for Axon, a premium of 33 per cent on its six month average.
Axon provides advice to companies who use programs developed by SAP, one of the world’s leading providers of enterprise software. Its non-executive chairman Roy Merrit yesterday said the board had recommended the all-cash offer to shareholders and that the deal would be completed by November.
Mark Hunter, who founded the company in 1994 before standing down as chief executive last year still holds an 11 per cent stake and is set to make almost £45m from the deal.
Axon’s client list – which includes BT, Barclays, GSK and Vodafone – will enable Infosys to win “transformational deals worth between $30m and $100m”, according to chief executive Kris Gopalakrishnan.
The deal will also allow Infosys to diversify away from the US, which accounts for over 60 per cent of its sales, and where spending on IT services is slowing sharply.
Gopalakrishnan said that Axon’s existing management, including chief executive Steve Cardell, would stay with the company and that its 2,000 employees were safe for now, although he said that jobs could eventually move to Axon’s offshore base in Malaysia.
According to IT analyst Richard Holway, Indian software services firms are increasingly interested in buying established onshore IT services players who have the expertise to win big projects.
“Bluntly, I have thought that Axon getting swallowed up was inevitable after its founder, Mark Hunter, stepped down.
“With the pace of acquisitions showing no slowing, I really do wonder if there will be any UK quoted IT software services companies of any size left soon,” he said in a note to investors.