Acquisition of Axon by HCL Technologies Limited
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Case Code: BSTR321 Case Length: 17 Pages Period: 2008 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: HCL Technologies Limited, AXON Group Plc. Industry: Information Technology Countries: India/UK Themes: Mergers & Acquitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
The case examines the acquisition of the UK-based SAP consultancy company Axon Group Plc. (Axon) by India-based IT software development company, HCL Technologies Limited (HCL). HCL announced the acquisition of Axon on December 15, 2008 for £ 440 million. Initially, Infosys Technologies Limited (Infosys), the second largest IT company in India, planned to acquire Axon. Infosys offered a total amount of £ 407 million to acquire Axon, a premium of 19.4% over the Axon's share price dated August 22, 2008, at 502.5 pence per share. However, in September 2008, HCL made a counter offer of 650 pence per share in cash for Axon. Since Infosys did not tender a revised bid, the management of Axon decided to go ahead with the offer made by HCL.
The deal gave HCL a prominent presence in the European SAP consultancy market as well as access to Axon's clients. However, the deal was criticized by many analysts who said that it was expensive for HCL and could impact the profitability of the company in future.
Issues
The case is structured to achieve the following teaching objectives
- Understand acquisition as a growth strategy
- Understand the advantages and disadvantages of cross-border acquisitions
- Understand the need for growth through acquisition in foreign countries
- Examine the rationale behind HCL's acquisition of Axon
- Analyze the Axon deal and evaluate whether it is expensive for HCL or not
Contents
Keywords
HCL Technologies Limited, Axon Group Plc, Inorganic Growth Strategies, Cultural Synergy, Integration Process, SAP Consultancy, SAP Applications, Application Implementation, Brand Equity, ERP Industry, Acquisition, Enterprise Application Service, Global Economic Slowdown, Business Transformation, IT Services company, HCL Enterprises, Infosys Technologies Limited
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