Acquisition of Axon by HCL Technologies Limited

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Case Details:

Case Code : BSTR321
Case Length : 17 Pages
Period : 2008
Pub Date : 2009
Teaching Note :Not Available
Organization : HCL Technologies Limited, AXON Group Plc
Industry : Information Technology
Countries : India/UK

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"For the next three to four years SAP will be a hot property in terms of application implementation. Reasons being, firms are ramping up their SAP applications and are looking at it as a business transformation tool."¹

- Sudin Apte, Senior Analyst, Forrester Research (India Operations)², in December 2008.

"It is an expensive deal. The ERP environment has deteriorated, making the situation even worse. The deal won't improve HCL's bottomline next year."³

- Anil Advani, Research Head of SBICap⁴ Securities, in November 2008.

Introduction

On December 15, 2008, HCL Technologies Limited (HCL), one of the world's leading Information Technology (IT) software service companies and the fifth largest in India, announced the acquisition of the UK-based SAP⁵ consultancy firm, AXON Group Plc. (Axon), for £ 440 million.⁶

HCL is a subsidiary of HCL Enterprises, based in India. The parent company was founded in August 1976 by a group of engineers led by Shiv Nadar (Nadar). It started with making micro-computers and laid the foundation for India's computer industry. Over the years, the company focused on research and development of computer hardware and software and gradually entered the software development business.

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1] "HCL Technologies Completes Axon Acquisition, Becomes Major Global SAP Player," http://in.ibtimes.com, December 17, 2008.
2] Forrester Research Inc provides analysis and advice in the field of technology and management. It was founded in 1983 in Cambridge, US, by George F. Colony. For the financial year that ended December 31, 2007, the revenues for the company was US$ 212.1 million and net income were US$ 18.9 million.
3] "Axon Board Gives Nod for HCL Bid," www.economictimes.com, November 25, 2008.
4] Founded in 1986, SBICAP was India's leading investment bank and project advisor, assisting domestic companies' fund-mobilization efforts. The State Bank of India held a majority share of 86.16% in SBICAP, a minority share of 13.84% was held by the Asian Development Bank in the venture.
5] Based in Germany, SAP is one of the largest software companies in the world. Its products are widely used by IT companies. SAP is an acronym for Systems Applications and Products in Data Processing. For the financial year 2008, SAP reported revenues of € 11,567 million and an income of € 1.93 billion.
6] As on February 6, 2009, 1 £ (UK) was equivalent to 71.85 Indian Rupees (INR).

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