HCL PICKS UP 10.43% IN UK-BASED AXON GROUP

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IN what may be seen as an attempt to deter any potential rival bidder, HCL Technologies has picked up a 10.43% stake in UK-based Axon Group from the open market for about £42.28 million. The company recently bought 6.4 million shares of the LSE-listed firm at a price of £6.3 per share, while an earlier transaction saw it picking up 0.3 million Axon shares at £6.5 apiece. HCL Technologies is planning to acquire the UKbased firm for £441-million, the largestever technology acquisition bid by an Indian company.

“HCL wants to acquire Axon at a fair price, fair valuation and the right time. There are things we have to do to ensure a positive outcome. One variable is price, which is 650 pence (price per share for HCL’s proposed Axon acquisition). So, we have bought this stake in Axon at a price lower than that,” HCL Tech CEO Vineet Nayar said. The company used its cash reserves to pick up the stake in Axon.

Asked about the impact due to the UK government’s takeover of banking firm HBOS, one of HCL’s top 10 clients, Mr Nayar said, “We have not assessed the impact, if any, due to HBOS. I have spoken to the management (of HBOS) and they said there will be no change in the outflow going forward. So, it’s business as usual.” A top 10 client like HBOS would have contributed over $40 million to HCL revenues over the last 12 months.

Talking about the deepening financial crisis and impact on IT spending, particularly after bellwether firm SAP reported an unexpected sales decline in the second half of September, Mr Nayar said, “No one knows what is happening or what the impact would be. The recent drop in SAP licence sales came as companies are freezing their capital expenditure. If the same happens next quarter, I‘ll be concerned.” The firm would also announce a big deal in the financial services space in the domestic market, he added.

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