In a move that places HCL Technologies ahead in the race for the acquisition of the Axon Group, the Board of the UK company on Thursday has dropped its recommendation of Infosys’ 600 pence a share offer, and said it would unanimously recommend HCL’s 650 pence a share bid to its shareholders.
This assumes significance as the recommendation by the Axon board establishes HCL’s offer as a ‘friendly bid’ and not a ‘hostile’ takeover. Moreover, while the shareholders in any case would have opted for a higher bid, the recommendation also means that HCL now has the option to convert its offer into a scheme of arrangement.
The decision to switch allegiance and recommend the HCL bid comes just days after the 60-hour period stipulated in the pact between Axon and Infosys lapsed without the latter improvising its offer. This left Axon free to amend its endorsement of the Infosys offer to shareholders, in favour of HCL’s.
The change of recommendation by the Axon Board does not imply that HCL Technologies has clinched the deal; any counter-bid at this stage can stretch the timelines. In case the status quo remains in the absence of a counter-bid, the clock will not tick on the offer until HCL Technologies publishes a formal offer document and sends it to the shareholders. Thereafter, the company has 46 days to get shareholders’ nod and close the offer.