Oracle Increases i-Flex Stake

Thursday, February 15, 2007

Oracle dropped another $1.08 billion on financial services software maker i-flex Solutions, a move that will help Oracle create independent business units and attack vertical markets, an analyst said Wednesday.  Based in Mumbai, India, i-flex has been slowly succumbing to Oracle’s gradual takeover.  The latest stock purchase brings Oracle’s ownership in the company to 82.92%, according to media reports from India.  The move was expected, since Oracle is moving to create independent business units in four areas: retail, communications, utilities, and banking.  That last unit will essentially be i-flex, as part of Oracle’s larger plan, said Jefferies & Co. analyst Robert Schwartz.  “This is part of a major push by Oracle into vertical markets,” Mr. Schwartz said…..To be sure, Oracle may be in for a challenge, at least with the unit that will be made out of i-flex.  The Indian company itself had a hard time selling banking software in the United States, leading to its focus in the emerging African market (i-flex bought Mantas for $122.6M).  But Oracle has shown it’s willing to wait for success in the financial services software realm, purchasing i-flex in small increments.

Its acquisition plans started in August 2005, when it announced it would pay $593 million for Citigroup’s 41% stake in the Indian company.  A year later Oracle brought its stake up to more than 55%.  Then last September, the company paid $531 million to raise its ownership in i-flex to 75%.  As of January 19 of this year, Oracle’s stake was 82.71%, according to i-flex’s Web site.

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