SAP market improving, reports HCL Axon

by Editor 9/25/2009 4:07:00 PM
The demand for SAP services is growing stronger again, according to HCL Technologies' subsidiary HCL Axon. Axon president Steve Cardell tells CNBC-TV18, “In the SAP market, we have seen positive movement in financial services, retail and also some core entities like consumer and life sciences.”

Demand virtually disappeared in the first quarter, says Cardell, but things have definitely picked up again, especially in the SAP market. "What we have definitely seen in this quarter is many of those projects now come back into place. So it will take a little while for that to feed through into order book but we definitely see optimism in the market compared to the first quarter of this year.”

HCL Axon is looking to expand its IT consulting services by acquiring several specialized companies in different sectors in continental Europe and some of the emerging markets over the next two quarters. As Cardell tells Dow Jones Newswires, "We would be looking at acquiring companies which are working in financial services, enterprise reporting and life-sciences sectors." Axon is looking for acquisitions in the $50-100 million range.

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Axon acquires UCS' Enterprise Solutions division

by Editor 7/21/2009 5:00:00 PM
UK consulting firm Axon has bought the Enterprise Solutions unit of South Africa-based software company UCS for an initial R57m (GBP 4.35) in cash. If the Enterprise Solutions division is successful in meeting profit targets, the number could grow to R125m (GBP 9.5m). Both companies have strong ties with German business software developer SAP: HCL Axon specializes in SAP software, while Enterprise Solutions specializes in SAP implementation.

In spite of UCS' division's strong position in the South African market, the company believed that Enterprise Solutions could only achieve sustainable growth through a global partnership that would give it access to international clients and more skills. Axon fits the bill: the UK consultancy employs 4,500 SAP consultants around the globe.

Under the current deal, HCL Axon will get a bigger platform in South Africa, while UCS will be allowed to grow its international profits by providing maintenance services and support for a limited period of time. Some of the money from the deal could be used for future acquisitions, to fund UCS'organic growth.

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Axon takeover approved by UK court

by Editor 12/16/2008 12:51:00 PM
HCL Technologies' 441 million pound offer to take over British consultancy Axon was confirmed Saturday by UK's High Court of Justice.

"The High Court of Justice has made an order confirming the reductionof Axon's share capital in connection with the HCL Scheme by which HCL EAS's acquisition of Axon is being implemented," the UK-based SAP consultancy service provider said in a statement.

Earlier, the court had sanctioned the HCL scheme at a hearing held on December 10. India's fifth-largest IT company HCL would conclude the acquisition on December 15. The HCL Scheme will become effective upon the HCL court orders being delivered to the Registrar of Companies(and in relation to the HCL Reduction Court Order, by the Register of Companies) which is expected to take place on December 15, it added.

With this deal, HCL will become one the largest SAP implementation companies in the world. Axon shares were temporarily suspended from the official list and the London Stock Exchange's mainmarket for listed securities from December 11.

The listing and admission to trading on the London Stock Exchange's main market for listed securities of Axon shares will be cancelled at 8 am on December 16, the day following the anticipated effective date of the HCL scheme," it added.

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.

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Axon investors approve HCL Technologies buyout deal

by Editor 11/26/2008 3:15:00 PM
Shareholders of the British SAP consulting firm Axon approved the acquisition of their firm by the Indian IT services giant HCL Technologies at an ‘extraordinary general meeting’ (EGM) in London on Monday.

HCL Technologies chief executive Vineet Nayar said: “Axon investors by majority (99.9 percent) accepted our cash offer of 650 pence ($9.78) per share. The deal will be finalised after the court approval December 15.”

On December 15, Axon will also hold its general meeting to endorse the court approval and finalise the acquisition.

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Axon wins $50 million IT contract from Air New Zealand

by Editor 11/14/2008 9:59:00 AM
UK consulting firm Axon has won a five-year IT contract from Air New Zealand. Under the terns of the five-year deal, the consultancy will provide support to the airline's IT infrastructure, including 7,500 desktops, 350 servers, and 800 packaged applications and SQL databases.

The contract is outcomes-based and it will be paid according to the quality of the IT services the consulting firm provides.

Axon replaced Gen-i as the airline's desktop support provider three years ago. The two IT services providers still regularly bid against each other.

Air New Zealand's networks are supported by Gen-i, while IBM manages the data centre and other hosting services.

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Axon to implement SAP at two leading utilities

by Editor 11/7/2008 2:30:00 PM
Axon, the world's largest dedicated SAP services partner, will undertake major SAP implementations at Huntsville Utilities in Alabama and at Snohomish Public Utility District (SNOPUD) in Washington State.

The Axon led implementations will deliver significant improvements too SNOPUD and Huntsville's internal and external operations. Both implementations will leverage Axon's Business Transformation methodology, combining "best practices" with proven benefits delivery. This is the 40th and 41st utility transformation program Axon has executed over the past 3 years in North America.

Huntsville Utilities provides electricity to 152,000 customers, water service to 80,000 customers, and natural gas services to 45,000 customers. Axon began the transformation program on September 22, 2008 and is responsible for directing the implementation of SAP Enterprise Resource Planning (ERP) and SAP Enterprise Asset Management (EAM). By introducing best business processes in finance, payroll, human resources, inventory and purchasing, asset and fleet maintenance, engineering, and field services, Huntsville will increase staff efficiency and productivity along with expected customer service improvements enabled by a comprehensive communications and services package.

William Pippin, CEO of Huntsville Utilities said, "Our goal is to deliver exceptional service to our customers through technological innovation. We selected Axon to help us achieve this goal because of their impressive track record of success in delivering SAP enabled transformations at large utilities across the country."

SNOPUD, with over 340,000 customers for its electricity and water services is the largest public utility district in Washington State and the twelfth largest utility in the nation in terms of customers served. On September 22, 2008, Axon began implementation of the SAP Utility Customer Relationship and Billing (CRB) solution.

By introducing best business processes in customer service, SNOPUD will meets its mission of providing exceptional levels of customer service through the adoption of customer self service features and the ability of staff to resolve customer queries more efficiently. In addition, the flexibility of the system will allow SNOPUD to rapidly meet management and regulatory mandates, enabling the system and the organization to keep pace with the rapid changes in the industry.

Shelley Burgett, Project Director at SNOPUD, said that, "We selected Axon, based on their experience and leadership in the Utilities sector, and their focused transformation approach that will deliver the greatest value out of this investment to our utility and our customers."

When asked for comment, Steve Peck, CEO and President of Axon Americas, said, "We are delighted to have earned the right to lead these two strategic transformation programs. The confidence that SNOPUD and Huntsville have placed in Axon is a tribute to our market leading experience the Utility Industry and to the relentless drive of our professionals for delivering value based business transformation."

 

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Infosys pulls out of the Axon bid

by Editor 10/13/2008 4:48:00 PM
UK IT consulting firm Axon will fall into the hands of HCL Technologies after Indian IT giant Infosys Technologies had pulled out of the bid.

Infosys had offered a 600 p a share bid in August. The offer was trumped by a 650p a share bid from HCL in September. Industry insiders expected a counter-offer from Infosys, which resulted in Axon shares rising to 685p. Infosys, however, chose not to come out with a bigger offer in the wake of the profits warnings issued by German software company SAP last Monday.

Axon said that a deal with an Indian group would give it the global scale and resources to provide other services, such as outsourcing, that it currently lacks.

Axon shareholders are still scheduled to meet on October 20 to consider the Infosys bid, but the deal is not likely to be approved at this point. Axon will also prepare the scheme document for the HCL bid and distribute it to its shareholders around October 24.

HCL Technologies is not too concerned about the current crisis. The company has already raised a £400-million loan to acquire the British consultancy at a competitive interest rate of 6.5%.

Even though analysts say that the bid is an expensive one in light of the bleak IT spending outlook, HCL sees Axon as "a lot more strategic now than at any other point."

HCL Technologies CEO Vineet Nayar said: "We have already raised the loan and that too in US dollar-Libor rate of 6.5% and not GBP Libor rate, which is much higher at over 7%," explaining that the company has "been working on the deal since March and [we] have evaluated every possible scenario. We have structured it in such a way that the inducement fee, which Axon will pay, very much covers any loss arising out of returning the loan. So, we do not lose anything."

Asked about HCL’s plans if the acquisition is a success, Nayar said: "We have done intense due diligence and the reason we took longer than usual was because we answered question like what happens post acquisition, to IT, culture, people, structure, customers, businesses – to all elements. There are three parts to our strategy. First, it will be very essential for us to demonstrate early wins from cross-leveraging customers. Secondly, it will be essential to go for integration of the two companies; and that is the reason I use the word merger and not acquisition. The third most critical aspect will be the long-term strategic direction, on how you make two plus two to be eight. The first two parts of the strategy are 0 to 12 months steps and the third is 12 to 48 months. So the strategic intent will be the defining success of our future relationship."

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Indian IT firms go for overseas acquisitions

by Editor 9/29/2008 4:47:00 PM
Indian IT company HC Technologies has trumped a bid from Infosys Technologies, offering £441.1 million in cash for Axon. If Infosys wishes to stay in the running, it needs to counter the bid within 45 days.

India’s second largest provider of software services has asked Axon shareholders not to make any definite decisions on the counter offer yet and wait for an announcement.

Following Infosys Technologies and HCL Technologies’ bids for the Surrey-based consultancy, Indian information technology firms are expected to make at least six similar acquisitions in the next 12 months.

Credit Suisse analysts say that more than half of the 11 IT companies that provide revenue guidance may not achieve their target this year. The new estimates are lower for Infosys, Satyam and Mindtree. Economist do not think that the worst period has started yet, which could translate into a longer period of slowdown for the firms.

Forrester India analyst Sudin Apte points out that there is a flip side to the situation, saying that, since valuations are low, Infosys, HCL and other IT companies will try to “buy the top line to meet guidance figures.”

He adds: “We will be surely seeing more such acquisitions as companies see a dip in client business. Besides the SAP practice, the IT sector will see more such sizeable ticket acquisitions in verticals such as retail, healthcare, telecom, and media.”

Hanuman Tripathi, CEO and managing director of Infrasoft Technologies, agrees: “Opportunity of covering the gap expected in the financial guidance and lower PE multiples already given, there could be certain large-scale western buy-outs that Indian software companies may opt for before March 2009.”

Indian IT firms have climbed up the value chain in recent years and are now competing with such global giants as Accenture, IBM and Hewlett-Packard (EDS). The boost in value has been effected in part by the acquisitions, which provided the Indian companies with “complementary skills, added capability besides business transformation (when IT becomes a critical part of the business model) capabilities,” explains Apte.

Infosys Consulting has been increasing investments and is currently in the red. The deal with Axon would help boost the company’s revenues.

Axon’s revenue comes primarily from SAP implementation services (about 80 percent) and high-end consulting (about 20 percent). The buy-out is expected to improve Infosys’ margin from the current 15-20 percent, because some of the work can be outsourced, and also to help Infosys’ operations in Europe.

The Axon deal will also bring around 2,000 employees to whichever Indian IT firm acquires it. Axon employees are very skilled at business consulting and transformation and have a lot of experience to bring to the table.

Both Infosys and HCL stand to profit from the acquisition. If HCL gets Axon, it will become the 12th biggest global provider of SAP implementation services. Infosys, on the other hand, will leap to the 10th position if it counters the bid successfully.

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Infosys to recruit 25,000 new staff

by Editor 9/10/2008 4:36:00 PM
India’s second biggest IT services company Infosys plans to hire 25,000 new employees this year as well as make several “selective” acquisitions with the aim to increase revenue in Europe and narrow Tata Consultancy Services’ lead at home.

The company also intends to add capacity in Eastern Europe, China and Latin America and hire about a thousand people in China over the next few years.

Infosys’ CEO Senapathy Gopalakrishnan said: “We’re looking at consulting and geographical expansion in Europe and the emerging markets like India and the Middle East. We want to be very selective in acquisitions.”

Last month, Infosys revealed its plans to buy the UK-based SAP consultancy Axon Group Plc for £407.1. Unconfirmed reports suggest that it may face a rivalling bid from HCL Technologies.

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Infosys facing competition for Axon?

by Editor 9/5/2008 3:28:00 PM
IT consulting firm Axon, which received a £407.1 million bid from Indian IT services company Infosys in August, may now receive a counter offer from another Indian firm, HCL Technologies.

Axon was set to become Infosys’ first European acquisition, but rumours surfaced yesterday that suggest that investment bank Merrill Lynch had been appointed to advise HCL Technologies on its offer, while Standard Chartered was lined up to provide the financing for the deal.

An HCL representative said: “We cannot comment on market rumours.”

Meanwhile, Infosys CFO V. Balakrishnan did not seem concerned over the speculation.

“These are hypothetical situations”, he said. “Even so, you have to understand the bid in the context of a people-intensive business. The offer we made has been ratified by the Axon management, accepted by its investors and even Axon employees are with us. So we do not see any obstacle to the acquisition.”

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