Fujitsu co to rival Infy Axon bid

NEW DELHI: The market buzz on counter bid to Infosys Technologies’ $753-million offer to buy UKbased Axon Group has a new twist. Banking sources now believe a counter offer could come from Japanese IT giants Fujitsu Software Corp or NTTSoft.

ET could not independently verify the speculation, or the probability of a counter bid from any of these two. While the $18-billion Fujitsu was earlier in the fray to acquire Axon, NTT Soft was keen on SAP assets in Europe. Any counter bid to Infy’s offer--announced on August 25--could come as early as next week.

The latest speculation comes even as homegrown HCL Technologies is seen as another candidate to launch a rival offer. HCL has reportedly sought the advice of Merrill Lynch in pursuing Axon, and may take a final call early next week, after putting in place a bridge financing facility, sources added.

The names of the two Japanese contenders are surfacing as some bankers believe the probability of a counter offer emerging from the Indian firms look rather remote. “Axon deal was peddled in the market for months, and most of them have had a look at it. But the surprise in the Infy deal must have been the price, which was certainly not out of whack,” said another source.

Fujitsu, it is believed, turned away from dealmaking after Axon management persisted with asking valuation of 700p, but later saw Infy striking a deal at 600p.

However, some analysts argue that overseas players, especially Japanese software firms, may not be able to squeeze out anything significant from an expensive counter offer. Unlike Infosys, neither NTT nor Fujitsu will be able to drive up operating margins through offshoring given the expensive workforce back home.

While NTT has no presence in India, Fujitsu has a small centre here. Speculation regarding the possibility of a counter bid to Infy offer surfaced soon after the acquisition announcement, as the key three shareholders of Axon hold only 18.1 per cent stake.

Analysts said Infy may have factored in 10-15 per cent flexibility in offer price considering that Axon is a listed entity and any deal is prone to counter offers. Since the announcement was made, the Axon scrip has been trading at a premium to Infy offer and is currently trading at 629p.

But this is significantly lower than the trading price which peaked at over 900p in 2007, and scaleable SAP assets are still ruling hot in the deal street.

Meanwhile, Infy top management is working hard to see the transaction through, with co-chairman Nandan Nilekani spending time in London to settle down into a comfortable working relationship with the UK target.