REFILE-UPDATE 1-Axon shares soar on counterbid hopes
(Corrects spelling of Infosys in paragraphs 1,3 and 4)
By Malcolm Locke
LONDON Aug 26 (Reuters) - Shares in computer software firm Axon Group Plc AXO.L soared on Tuesday on expectations of a counterbid to Infosys Technologies's (INFY.BO) 407 million pound ($751 million) offer for the British-based company.
Axon shares were 20.9 percent higher at 607.5 pence by 1119 GMT, above the 600 pence a share cash offer.
Infosys, India's No.2 software services company, agreed to buy Axon on Monday, a public holiday in the United Kingdom.
Axon announced an interim dividend on Tuesday of 2.25 pence per share, which shareholders will be entitled to as part of Infosys's bid.
Some analysts said they were expecting a counterbid while others said it could spark more activity in the sector.
Jonathan Imlah of Altium Securities said the Infosys 600 pence offer was not a knock-out price and expected Axon shares to move higher in anticipation of a rival offer.
"Axon is a global leader in its field. We believe there is room for a counter-bid closer to 700 pence a share," Imlah said in an investment note on Tuesday.
Landsbanki Securities analyst Michael Donnelly said software services firm Morse Plc MOR.L could attract a takeover offer, while Anite Plc (AIE.L) and Innovation Plc (TIG.L) also could be vulnerable to overseas acquirers.
Donnelly said on the products side, Kofax Plc (KFX.L) and SDL Plc (SDL.L) are also possible bid targets.
"We regard Morse as the most likely company to benefit from the read through from the Axon bid, with its Diagonal SAP consultancy being the most obvious attraction," he said in an investment note.
Axon is also involved in the application of SAP technology, one of the factors that drove Infosys to make its takeover approach. Indian outsourcing firms like Infosys and Tata Consultancy Services (TCS.BO) are keen to expand through acquisitions to access new markets and technologies.
Axon Chief Executive Stephen Cardell told Reuters the board had a duty to consider any higher offer for the company.
"There are about 20 companies worldwide who are working in our market who could possibly bid, but the Infosys offer is the only one on the table and the one the management are backing," Cardell said.
He said the 600 pence a share offer from Infosys was "a good price", but acknowledged some shareholders may be disappointed after the shares hit a high of 955 pence earlier in the year.
"Six hundred pence is still a 33 percent premium to the average price of the stock over the past six months and it's in cash," he said.
He said Axon had been in talks with Infosys for the past couple of months.
Axon's three largest shareholders -- Mark Hunter, Donald Kirkwood and Paul Manweiler -- and their family trusts own 17.9 percent of the equity and stand to gain about 73 million pounds if the bid is successful.
(Editing by Karen Foster and Erica Billingham)
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