Infosys Technologies LTD has offered to buy UK based SAP consulting company Axon Global for £407.1m ($750 million or INR 33.1 billion). This was a special news for all the Infosys employees including me that the deal is almost at the verge of being success. If you are not aware, nearly 1/4th of Infosys revenue comes form its unit called Enterprise Solutions which specializes in enterprise tools like SAP, Siebel, Oracle, Tibco etc.
Infosys has always been trying to spread its operations in UK and this would definitely a major breakthrough. Today morning I proudly watched our CEO, Mr. Kris Gopalakrishnan talk about the details of the deal on CNBC today morning 10:10am. Infosys stocks were trading 10 points down as soon as the markets opened (overall BSE sensex is down) because the investors were not confident about the deal. Infosys profit margins are 30-31% whereas Axon’s profit margin is just about 14-15%.
As soon as Kris clarified certain details of the deal, market sentiments turned the other way and by 10:20 Infosys stock was trading 20 points up. The confidence with which he talks is simply amazing. I could see the same confidence in him with which the company was started 27 years ago with just 7 employees and INR 10000.
Here are some interesting things to note about the deal:
Infy buy is largest outbound acquisition by Indian IT company
Infosys targets to touch $5 billion mark in profit this year. Axon’s revenue is $ 1.6 billion and considering this, we need to wait for a new guidance from Infosys once the deal is trough. (And don’t be alarmed if the new guidance is $6 billion 😉 )
According to Economic Times Mr.Nandan and Mr.Murthy played a significant role in this deal. Whether they are involved or not, good work Infy team!!!
Axon’s share rose a whopping 20% in London stock exchange as soon as the acquisition news was released.
20% increase is the highest for Axon ever since year 2000.
Axon’s revenue also increased considerably this quarter due to increase in sales from speculation of a take over from Infy.
The entire amount of the deal is paid entirely in CASH!!!
Axon board has asked its share holders to vote in favor of the deal. The only reason why this deal wouldn’t happen as of now is a counter offer from other companies like TCS, Wipro etc to Axon. Considering the current market situation and the decline in revenue of other IT majors, I doubt whether any other IT company would be able to beat Infy’s offer of $750 million.
There are much more details that floats inside the Infosys network. But those details cannot be published here. So just wait until the deal goes through. 🙂 Proud to be an Infosion!!!