BANGALORE: Infosys Technologies on Monday announced its plan to acquire the entire equity base of Axon Group of the U.K. in an all-cash transaction worth 407.1 million pounds (Rs. 3,310 crore).
Addressing the media here, S. Gopalakrishnan, Infosys CEO and Managing Director, said Axon had been valued at six pounds per share, which implied a 33-per cent premium over the average price in the last six months.
The price includes any interim dividend that may be declared when the company’s board meets on Tuesday. The acquisition process is likely to be completed on November.
Founded in 1994, Axon earned revenues amounting to 204.5 million pounds in 2007. About 55 per cent of its revenues come from Europe and it has 2,000 employees. It made a gross profit of 56.3 million pounds in 2007. Its operating margin was 15 per cent in 2007, which is considerably lower than Infosys’.
Mr. Gopalakrishnan said 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 leveraged deal,” he added.
V. Balakrishnan, Chief Financial Officer, Infosys, said the acquisition made sense because the company had moved into consulting and other “value-added spaces” in the last few years. About 24 per cent of revenues came from consulting and enterprise solutions, he pointed out. Revenues from SAP services had grown by 64 per cent in the last three years. “This (SAP services) is an area where is a lot of demand. There will be plenty of opportunities for growth,” he added.
Mr. Balakrishnan referred to Axon as a “U.K.-centric company, lacking in financial strength and global reach.” He said the acquisition would enable Infosys to deliver from several delivery centres across the world.” He said revenues from Axon would start flowing in only in the fourth quarter of the current year.
Mr. Balakrishnan said the “enterprise solution space has been robust, unaffected by the global economic slowdown.” About 19 per cent of the company’s revenues are from the enterprise solution services, of which, about one-third comes from delivering SAP solutions.
Saturday, August 30, 2008
HP -EDS deal
Hewlett-Packard closed its $13.9 billion acquisition of Electronic Data Systems. Luckily for the cautious computer company, the environment looks fairly welcoming for investment-grade bond offerings.
Doug Read, an analyst at Thomas Weisel Partners, expects H-P to sell $10 billion of debt to finance the deal and use cash to finance the rest. H-P should end the entire process with $8.5 billion of cash on hand and a debt-to-capital ratio that will rocket up to 24% from 6%. Cathie Lesjak, H-P’s finance chief, said in a conference call with analysts in early August that H-P expects the deal to cause “substantial cash usage for Q4.” The companies won’t discuss details of the deal’s impact until they hold another call with analysts on Sept. 15.
Several big companies have been able to find investors to buy high-grade debt. In mid-August, several big companies came to market with jumbo bond offerings, including American International Group, Citigroup, Ingersoll-Rand, Entergy Louisiana, J.P. Morgan Chase and MetLife.
All of those companies, however, were looking for far less than $10 billion. AIG sold $3.25 billion, and MetLife $1.03 billion. With the exception of banks and financial institutions, few companies have tried to sell more than $2 billion in high-grade bonds. There is still, after all, a credit crunch going on. But hope springs eternal: by the time H-P is ready to finance the deal in the next quarter, the outlook may improve.
Doug Read, an analyst at Thomas Weisel Partners, expects H-P to sell $10 billion of debt to finance the deal and use cash to finance the rest. H-P should end the entire process with $8.5 billion of cash on hand and a debt-to-capital ratio that will rocket up to 24% from 6%. Cathie Lesjak, H-P’s finance chief, said in a conference call with analysts in early August that H-P expects the deal to cause “substantial cash usage for Q4.” The companies won’t discuss details of the deal’s impact until they hold another call with analysts on Sept. 15.
Several big companies have been able to find investors to buy high-grade debt. In mid-August, several big companies came to market with jumbo bond offerings, including American International Group, Citigroup, Ingersoll-Rand, Entergy Louisiana, J.P. Morgan Chase and MetLife.
All of those companies, however, were looking for far less than $10 billion. AIG sold $3.25 billion, and MetLife $1.03 billion. With the exception of banks and financial institutions, few companies have tried to sell more than $2 billion in high-grade bonds. There is still, after all, a credit crunch going on. But hope springs eternal: by the time H-P is ready to finance the deal in the next quarter, the outlook may improve.
Wednesday, August 13, 2008
Wipro completes Gallagher buyout
WIPRO TECHNOLOGIES has completed the acquisition of US-based GALLAGHER FINANCIAL SOLUTIONS(GFS),which brings into fold around 100 people among with technology solutions focused on the loan organization market.Without disclosing the value of the deal,a WIPRO SPOKESPERSON said GFS is a provider of loan origination and processing systems through it's NETOXYGEN product.It has a client base among several large and mid tier banks in the US.GFS will be integrated with the financial services vertical of WIPRO TECHNOLOGIES and will be called WIPRO GALLAGHER SOLUTIONS .The acquisition was done during the first quarter of the current fiscal.The combination of the two companies will seen integrated delivery of technology and services for the loan origination market.GFS is a two decade-old company having a single key investor.
i-flex baggs $90 million order
BANKING software major i-flex has bagged a deal valued at $90 million from National Australia Bank(NAB) , one of it's largest wins ever and a first for it's main banking solution in the Antipodean nation.
The five year contract is part of a larger deal awarded to ORACLE,which owns a majority stake in i-flex.
NAB has selected ORACLE to supply software as a part of a five year plan to replace it's banking IT systems.The first phase of the initiative includes the setting up of a technology platform for a low cost direct banking system.
Sources said that besides it's core banking solution,i-flex will provide support activities such as professional and application management services.i-flex recently announced it's decision to change it's name as ORACLE FINANCIAL SERVICES.India is home to three major banking solutions business,which include i-flex,FINACLE of INFOSYS and TCS' BaNCS.
Besides the large ones, the prominent players in the space include NUCLEUSSOFTWARE,3IINFOTECH and INFRASOFT TECHNOLOGIES.The India-Headquarted firms battle it out among them selves and with other global banking solutions majors like MISYS and METAVANTE.
The five year contract is part of a larger deal awarded to ORACLE,which owns a majority stake in i-flex.
NAB has selected ORACLE to supply software as a part of a five year plan to replace it's banking IT systems.The first phase of the initiative includes the setting up of a technology platform for a low cost direct banking system.
Sources said that besides it's core banking solution,i-flex will provide support activities such as professional and application management services.i-flex recently announced it's decision to change it's name as ORACLE FINANCIAL SERVICES.India is home to three major banking solutions business,which include i-flex,FINACLE of INFOSYS and TCS' BaNCS.
Besides the large ones, the prominent players in the space include NUCLEUSSOFTWARE,3IINFOTECH and INFRASOFT TECHNOLOGIES.The India-Headquarted firms battle it out among them selves and with other global banking solutions majors like MISYS and METAVANTE.
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