Acquisition of Axon by HCL Technologies Limited


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : BSTR321 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Managing in Tough Times/ Slowdown in Global Automobile Industry
Case Length : 17 Pages
Period : 2008
Pub Date : 2009
Teaching Note : Not Available
Organization : HCL Technologies Limited, AXON Group Plc
Industry : Information Technology
Countries : India/UK

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:


» 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:

  Page No.
Introduction 1
Background Note 2
The Deal 6
The Benefits 9
The Drawbacks 10
Exhibits 12

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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