Infosys snaps up Axon in £407m deal

Published on Monday 25 August 2008 21:45

INFOSYS, the Indian software giant, has agreed to buy UK-based Axon in a £407 million cash deal.

India's second-largest IT company said it was offering shareholders in Axon 600p a share, a 19.4 per cent premium to the Egham-headquartered firm's closing price on Friday.

Axon, a business adviser for companies that run SAP AG software, has around 2,000 employees.

Kris Gopalakrishnan, chief executive of Infosys, said the aim of the deal was to create a "leading global SAP services provider".

"The strategic combination of our groups will accelerate the realisation of our common aspiration – that of becoming the most respected provider of business transformational services in the global marketplace," he said.

Axon shareholders will also be allowed to keep any dividend the company announces when it reports interim results today, Infosys said.

Royal Bank of Scotland was the sole advisor to Infosys, in what is the largest ever foreign takeover by an Indian IT company. Axon was advised by Citibank.

The deal is Infosys' second acquisition in little over a year, and will help narrow the gap between the Bangalore-based company and India's largest IT company, Tata Consultancy Services.

Infosys aims to complete the deal by November, it said in a statement to the Mumbai Stock Exchange.

Listed on the Nasdaq stock exchange in New York, Infosys has a market capitalisation of around $22 billion.

Gopalakrishnan has been seeking to diversify sales, after warning earlier this year that customers in the US were delaying orders.

In July, Infosys, which designs supply chains and offers back office services, reported a 21 per cent rise in profits but warned it could take a hit as many of its major western clients contend with the effects of the credit crunch.

Both Infosys and Tata Consultancy Services have been seeking to increase revenues from Europe, Asia, the Middle East and Latin America to cut the dependence on the US, which accounts for more than half the sector's revenue.