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.