HCL goes head to head with Infosys over Axon buy
Barely weeks after Infosys announced it’s plans to acquire the Axon Group, HCL Technologies has decided to make a counter offer for around £441 million ($814 million).
HCL is offering 650 pence a share, or 8.3% more than Infosys’s 600 pence bid.
Infosys was quick to urge restraint, asking Axon shareholders not to take any action in haste, while the Axon board said they were pleased that HCL recognised the quality of their business.
HCL has also signed an inducement fee contract, which means that if the deal doesn’t go through, they would get 1% of the offered price from Axon.
HCL plans to fund this acquisition through debt financing, as opposed to Infosys, which has a large war chest and will go in for an all cash deal. HCL has a commitment of £400 million from Stanchart at an interest rate of 6.5%.
Update: Investors seem quite nervous about this deal and are of the opinion that balance sheets of both companies would be stretched. In keeping with that sentiment, share prices of both companies were hammered in the stock markets. There is also a strong possibility that Infosys may walk away from the deal rather than try and get into a bidding war.
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