HCL TECH NOW TALKS OF 'CULTURAL FIT' WITH AXON

PP Thimmaya & Boby Kurian, Bangalore
The Economic Times

HCL technologies chief executive Vineet Nayar believes his company has struck a "cultural chord" with UK-based Axon Group, which it is bidding to buy, but sees a "more than even possibility" of a third contender arriving on the scene.

Last weekend, HCL countered Infosys Technologies' $753 million, or 600 pence per share offer, to acquire Axon with $811-mn bid at 650p per share.

"One may think it is a duel between HCL and Infosys, but these are clearly early days in this acquisition story," Nayar said even as Bangalore-based company mulls revising its offer in the wake of HCL's entry into the fray.

"HCL and Axon have hit it off quite well and there is a lot of cultural fitment between the two. HCL has a very entrepreneurial work culture and there's nobody imposing their vision or telling how to lead their lives," he said.

He pointed to an Axon Board statement taking note of the HCL bid last Friday as indication of where the UK company's preferences lay. "They mention about HCL's long relationship with Axon. That is not normal.

The 1 percent inducement fee they have signed with us also shows that they want HCL bid to kick in without saying it in so many words," he observed.

In the last five acquisitions, HCL has integrated over 2,000 employees and has 3,000 staff in the UK, the highest for any Indian IT company, he said. A recent CLSA report suggests that Axon may find HCL more culturally compatible in the event of a bidding battle with Infosys.

Nayar said the deal also made business sense as HCL derives just around 11 percent of its revenue from enterprise applications, unlike other domestic rivals for whom the segment contributes 35-40 percent to revenue.