Co-founders to hit jackpot after £44m cash offer
Amongst the gloom and doom of asset deflation and re-pricing, it is refreshing to see founding technology entrepreneurs getting just awards for the initial hard work and risks. Mark Hunter, who started Axon in 1994, is in line to receive more than £44m in cash for his remaining 11.6 percent stake; Donald Kirkwood and Paul Manweiler will also receive a sizeable sum for their combined stake of 6.3 percent. As predicted at The Chilli’s Bath University speech, ‘Born Global’ and ‘India-myths, realities and opportunities’, cash rich Indian IT companies are outbidding each other in order to reduce dependency on US markets and increase their European footprints.
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Bidding war between HCL and Infosys
Regardless of whether shareholders will accept the board’s recommendation to accept the higher bid from HCL of £441m, and Infosys’ initial offer of £407.1 million for Axon, the co-founders are in line to hit a cash jackpot. Axon is a UK-based SAP consulting company, with revenues of £204.5 million and profit after tax of £20 million.
Axon provides consultancy services to multinational organisations that have chosen SAP as their strategic enterprise platform and has about 2,000 employees. Specialising in the delivery of change through technology enabled transformation programs, Axon's consultants bring in-depth industry expertise alongside best practice functional knowledge to address the strategic, operational, information management and organisation effectiveness challenges faced by organisations today. Founded in 1994, today Axon has offices in the United Kingdom, North America, Malaysia and Australia.
For the year ended 31 December 2007, Axon reported profit after taxation of £20.2 million (INR1.6 billion[see note 1]; US$ 37.4 million [see note 2]) on revenue of £204.5 million (INR16.6 billion [see note 1]; US$378.3 million [see note 2]).
Infosys believes that the acquisition will accelerate the achievement of some of Infosys’ current strategic corporate objectives including the continued expansion of Infosys’ consulting capabilities that are required to engage with the large business transformation programs of Infosys’ marquee clients.
HCL Technologies Limited (HCL) announced its intention to make a cash offer of 650 pence per share for Axon (including the interim dividend of 2.25 pence) on 26 September 2008.
Only 60 hours to re-bid
In connection with the Infosys offer, the company entered into an implementation agreement with Infosys. Under the terms of this agreement, the company undertook that, in the event of a competing proposal being received from a third party, the board would not vary or amend its recommendation of the Infosys offer for a period of 60 hours from the time Infosys was notified of the competing proposal. The 60 hour period during which Axon is prevented from varying or amending its recommendation has now elapsed.
Axon is ready for the dowry
Axon and HCL have enjoyed a long standing relationship. The board of Axon is pleased that HCL has announced its intention to make an offer. The HCL offer values Axon's existing issued and to be issued (fully diluted) share capital at approximately £441 million. The value of the HCL offer is at a premium of 8.3 percent to the value of the Infosys offer.
Accordingly, the board withdrew its recommendation of the Infosys offer and intends unanimously to recommend the HCL offer when it is made.
Notes:
1. uses closing rate at 22 August 2008 of INR81.34/£
2 uses closing rate at 22 August 2008 of US$1.85/£
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© Chilli Publishing Ltd 2008 |
25 OCT 2008 |
