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Oracle to buy 43 pc stake in i-flex Plans another 20 pc through open offer

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As per the deal, the current i-flex management team will continue to run the company and will align product development, sales, marketing, and services activities with Oracle.

Our Bureau

Bangalore, Aug 2

ORACLE Corp said today that it was acquiring up to 61 per cent stake in i-flex Solutions Ltd in a $909-million (Rs 3,952 cr) deal, which enables it to broaden its product portfolio in the financial services space.

Oracle expects to pay $593 million for Citigroup Venture Capital International's 43 per cent stake (41 per cent on a diluted basis) at Rs 800 per share and $316 million for an additional 20 per cent stake, which it plans to acquire from the public through an open offer.

Oracle has fixed a price of Rs 882.86 per share for the public offer that will open around August 3.

The offer price was marginally below Tuesday's closing market price of Rs 896.15. The news of acquisition had pushed up i-flex share price on the Bombay Stock Exchange to an intra-day high of Rs 901.8.

The offer price of Rs 882.62 (which is at six per cent premium to two-week average price of i-flex stock) is attractive, said Mr Greg Maiffei, Oracle CFO in a teleconference. Subject to regulatory approvals, the transaction is expected to close by the end of 2005.

"i-flex is the hottest software company in the banking industry, signing more new customers than any other banking software company in each of the last three years," said Oracle CEO, Mr Larry Ellison in a press release. "Banking is a strategic industry for Oracle with 9 out of the top 10 banks already running Oracle ERP applications. Oracle's overall application strategy is to go beyond ERP and offer customers richer industry-specific functionality. i-flex gets us there in banking."

According to the terms of the deal, the current i-flex management team will continue to run the company and will align product development, sales, marketing, and services activities with Oracle. Mr Charles Phillips, Oracle President, will join the i-flex board.

"i-flex will remain as Oracle's listed subsidiary in India," Mr Phillips said in the teleconference adding it helps in maintaining visibility, attracting talent and minimising the risk of integration.

"Aligning with Oracle, we can jointly offer an unmatched value proposition to our global customers with truly integrated solutions across the front, middle, and back office," said Mr Rajesh Hukku, Chairman and Managing Director of i-flex Solutions.

i-flex has a customer base of 575 banks spread across 11 countries. The company has an employee base of close to 5,500 people globally.

(This article was published in the Business Line print edition dated August 3, 2005)
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