HCL Tech to close 441 mn pounds Axon deal

India's fifth-largest IT company HCL Technologies
is all set to conclude its £441-million acquisition of Axon Group on December 15.
With this deal, HCL will become one the largest SAP implementation companies in the world with consulting in the front end and application and infrastructure maintenance in the back end as core strengths.

Currently IBM and Accenture are leaders in the SAP implementation vertical globally.

The buyout comes at a time when IT companies like HCL desperately need to scale up vale added offerings. On 26 September 2008, the board of HCL Technologies announced that it will pay 650 pence in cash per Axon share, valuing the entire share capital of Axon at approximately £441.1million.

India’s second largest IT company Infosys was also in the lead to acquire Axon and had made a cash offer of £407.1 million for the same. But Infosys was subsequently outbid by HCL Tech, which is all set to close one of India’s largest buyouts overseas on Monday.

With a merger of Axon with HCL Tech, contribution of enterprise applications services in HCL Technologies is expected to go up from 11% currently to about 30%. The deal is however expected to put pressure on HCL’s margins.