Business | Technology

Infosys shares drop on fears of counterbid for Axon

Shares in Infosys Technologies gave up gains of more than two per cent and ended lower on Tuesday after a London-based securities house said it could face a counterbid to acquire Britain's Axon Group.

  • Reuters
  • Published: 23:43 August 26, 2008
  • Gulf News

Bangalore: Shares in Infosys Technologies gave up gains of more than two per cent and ended lower on Tuesday after a London-based securities house said it could face a counterbid to acquire Britain's Axon Group.

India's second-largest software services exporter said late on Monday it had agreed to buy the British consultancy for £407 million ($753 million).

The cash deal values Axon at 600 pence a share, a 19.4 per cent premium over Friday's close of 502.5 pence. Altium Securities said in a note on Tuesday in London it believed there was room for a counterbid closer to 700 pence as Axon continued to perform well and was widely recognised as a global leader in its field.

Cost of acquisition

Traders said there were worries a bidding war could push up the cost of the acquisition and hurt earnings in the near term.

"In any bidding war a company ends up overpaying for an acquisition," a Mumbai-based analyst said.

Shares in Infosys ended down 0.3 per cent at Rs1,697.60, after having risen as much as 2.2 per cent in early trade. In comparison, the main BSE index closed up 0.2 per cent after falling as much as 1.1 per cent earlier.

In London, shares in Axon were trading up 20 per cent at 603 pence at 1020 GMT.

Analysts had earlier said the acquisition would give Bangalore-based Infosys access to new clients.

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