Infosys- Axon

The Axon Global announcement by Infosys would count among the more exciting developments in recent times in an industry that has been plagued by a number of transient problems. The announcement has, for obvious reasons, elicited many responses and reactions, and here are some, put together by the Prayag Market Watch team:

Straight from the horse's mouth- Kris Gopalakrishnan, CEO, Infosys, commenting on why the deal makes business sense:

The acquisition would enable Infosys to become a global SAP consulting service provider. The company would also have the global reach to participate in large deals. About 28 percent of our business comes from Europe and by adding Axon we will become even stronger.

There was still strong demand for SAP systems, with Infosys registering a 62 per cent increase in orders in the past year. The deal would allow Infosys to compete more effectively on the international stage with rivals such as Accenture, Oracle and Cap Gemini. Around half of Axon’s revenue comes from the United States. Our rationale was that with this acquisition, our global reach, scale and our ability to participate in large transformational deals would be significantly enhanced.

We have come across Axon in many situations and respect the way the company is run. We are not able to say exactly how the two companies will be integrated yet, as that is something we will have to discuss with its management, but we are confident they will continue to grow strongly once the deal is completed.

This is our first acquisition (in Europe) and right now our focus is to make sure that this process goes through before we talk about where we go next.

The Axon Global Viewpoint - Excerpts from an interview with CEO Stephen Cardell

In terms of the business, Axon's vision statement is to be the world No.1 SAP firm and joining forces with Infosys allows us to rapidly accelerate towards that objective. It gives us additional geographic coverage, gives us more scale and a board of proposition. For all of those reasons this transaction makes a lot of sense from a business point of view.

From a shareholder's point of view we looked at the offer price. It was a 33% premium over the last six-month share price and it was all cash. We felt that it was a fair deal for Axon shareholders and that's why the management is supportive of this deal.