Infosys shares fall on counterbid fears for Axon

Tue Aug 26, 2008 12:44pm BST
 
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By Sumeet Chatterjee

BANGALORE (Reuters) - Shares in Infosys Technologies (INFY.BO) gave up gains of more than 2 percent and ended lower on Tuesday after a London-based securities house said it could face a counter bid to acquire Axon Group AXO.L.

India's second-largest software services exporter said late on Monday it had agreed to buy the British consultancy AXO.L for 407 million pounds.

The cash deal values Axon at 600 pence a share, a 19.4 percent 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.

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 percent at 1,697.60 rupees, after having risen as much as 2.2 percent in early trade. In comparison, the main BSE index closed up 0.2 percent after falling as much as 1.1 percent earlier.

In London, shares in Axon were trading up 20 percent at 603 pence at 11:20 a.m.  Continued...

 
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