HCL's Acquisition of Axon | Business Strategy Case Studies

Details

Case Code : CLBS057
Publication date : 2009
Subject : Business Strategy
Industry : Information Technology
Length : 04 Pages
Price : Rs. 100

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Key words:

Acquisition, SAP, business transformation, ERP, HCL Technologies, HCL AXON, HCL EAS, infrastructure management, application maintenance, global delivery, enterprise application services, Capgemini, Deloitte Consulting, Logical PLC, economic slowdown

Note

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

Abstract:

On December 15, 2008, HCL Technologies (HCL) announced its acquisition of AXON Group Plc (Axon), a UK-based consulting firm, to tap the potential in the lucrative SAP market. The deal, which was hailed as the biggest acquisition in the Indian IT industry, was expected to equip Axon with infrastructure management facilities and better application maintenance while it enabled HCL to reduce its dependence on the US and focus on the European SAP market. Analysts, however, felt that successful implementation of the deal would be difficult in the wake of the global economic slowdown. In addition, they ruled out any significant gain in profits from the merger in the absence of a smooth integration. However, HCL AXON said that the growth outlook of the acquisition was positive considering the potential of the SAP market.

Issues:

» Market analysis
» Competition
» Market leader strategy
» Market entry strategy

Introduction

On December 15, 2008, HCL Technologies Limited (HCL), a division of Delhi-based IT company, HCL Enterprises, announced its acquisition of UK-based Systems Applications and Products in Data Processing (SAP) consultancy firm, AXON Group Plc. (Axon) for £ 440 million...

Questions for Discussion:

1. Discuss the rationale behind HCL's acquisition of Axon. Critically analyze the pros and cons of the acquisition.
2. What are the potential benefits to HCL from this acquisition? Do you agree with analysts that HCL had overpaid?
3. Critically analyze the future of the deal in light of the current economic slowdown.

HCL's Acquisition of Axon*