MUMBAI/SAN FRANCISCO – Oracle Corp. boosted its offer for Indian banking software provider i-flex Solutions Ltd. to $1.3 billion, driving up i-flex shares 17 percent to a record high.
Oracle, the world’s biggest maker of database software, said it wanted to take its stake in i-flex to 90 percent and raised the price it is willing to pay to 2,100 rupees per share, up 42 percent from 1,475 rupees previously.
The revised offer, which Oracle said was final, represented a 20 percent premium to i-flex’s closing price on Thursday. It values i-flex at 49 times forecast earnings, versus a sector average of Indian application software makers of 24.
“It’s difficult to say what business logic they see,” said Amish Choksi, vice-president of institutional equities at Edelweiss Securities in Mumbai. “I think they have not got the kind of response they expected, which is pushing them to raise the offer price.”
At 0709 GMT, i-flex shares traded up 16.5 percent at 2,036 rupees in a Mumbai market down 0.6 percent. They had earlier hit a record of 2,055 rupees, up 17.4 percent.
“The offer price is quite good to tempt any domestic shareholder,” said S.P. Tulsian, an independent consultant. “At least now Oracle should get a positive response. Shareholders should not have any reservations when so many other good stocks are there.”
Oracle already owns 55 percent of i-flex and in September offered to pay up to $531 million to increase its stake to 75 percent.
The new offer means Oracle is bidding for nearly 28.4 million i-flex shares worth 59.5 billion rupees, or $1.3 billion. An Oracle spokesman confirmed that calculation but declined to say why the company had revised its proposal.
“There will not be another open offer and Oracle will not undertake a delisting for at least the next five years unless i-flex shares are selling at a significantly lower price than they are today,” Oracle Chief Executive Larry Ellison said in a statement.
“This is the last opportunity for i-flex shareholders to tender their shares to Oracle.”
I-flex counts Citigroup and HSBC among its clients and saw second-quarter revenue jump 40 percent to 5 billion rupees.