Oracle Raises i-flex Offer

by CXOtoday Staff    Dec 09, 2006

Oracle Corporation, the world’s largest software maker, has revised its open offer price for i-flex solutions by 42% to Rs 2, 100 a share. The offer size has been increased from 20% to 35%. Priced at 20% premium to the initial closing share price of Rs 1,751, the offer will cost Oracle $1.33 billion (nearly Rs 5,960 crore) in case it is fully subscribed.

The revised offer, includes an interest payment of Rs 16 a share, values i-flex at nearly $4 billion (Rs 18,000 crore). The company last year had recorded a total income of Rs 1,153 crore and a net profit of Rs 245 crore.

Oracle had announced on September 13 that it would launch a 20% open offer at Rs 1,475. The offer to open on November 6, later deferred to December 4. The offer, arranged by DSP Merrill Lynch, will close on December 23.

It was in line with the Securities and Exchange Board of India’s takeover regulations that required a group or individual to come out with a 20% open offer to minority shareholders after their acquisition of shares in excess of 5% of a company in a year.

Oracle has been buying i-flex shares over the last one year. On August 3, 2005, the company bought a 41% stake from Citigroup Inc and an additional 20% for smaller investors for $909 million. Oracle controlled almost 55% in i-flex by the end of September this year.

The revision is aimed at getting shares from minority shareholders, which otherwise appears impossible because the stock has been trading above the previous offer price.

Larry Ellison, CEO, Oracle, said, “This is the last opportunity for i-flex shareholders to tender their shares to Oracle. There will not be another open offer and Oracle will not undertake a de-listing for at least the next five years, unless i-flex shares are selling at a significantly lower price than they are today.”