Software // Enterprise Applications
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12/8/2006
01:55 PM
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Oracle Bids For Larger Stake In Indian Software Vendor i-Flex

Oracle already owns 55% of i-flex and is looking to own more of an offshore vendor that has been one of the bigger beneficiaries of the outsourcing boom.

Oracle on Thursday said it wants to up its holdings in red-hot Indian banking software and services vendor i-flex Solutions to 90% and is offering to pay $47.14 per share for the stake -- a 20% premium over Wednesday's closing price in Mumbai for i-flex shares.

Oracle, which already owns 55% of i-flex, didn't give a reason for the offer, which represents a multiple of 49 times forecasted earnings and is well above industry averages for similar deals. However, it's clear the company is looking to get a larger piece of an offshore vendor that has been one of the bigger beneficiaries of the outsourcing boom.

For the six months ended Sept. 30, i-flex saw revenue increase 46% year over year while net income jumped 123%. I-flex's roster of blue-chip customers includes HSBC and Citigroup, its former corporate parent.

Oracle had previously offered $32.98 for a larger stake in i-flex. In a statement, CEO Larry Ellison said the latest offer of $47.14 is Oracle's last and best. "There will not be another open offer. This is the last opportunity for i-flex shareholders to tender their shares to Oracle," said Ellison.

Oracle originally acquired Citigroup's 43% share of i-flex last December. At the time, Oracle president Chuck Phillips said partnering with i-flex would be key to Oracle's growth in the banking sector, which has been one of corporate America's more aggressive users of offshore outsourcing.

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