Oracle looks ahead with I-flex deal

Oracle has agreed to acquire a majority stake in Indian banking software company I-flex Solutions, the database giant said on Tuesday.

California-based Oracle said it is acquiring Citigroup Venture Capital International's 41 per cent ownership stake in I-flex. Reports circulated last week that Citigroup's private equity arm had been looking to sell its stake in I-flex, which was valued at roughly $650m. Oracle did not provide details of the transaction.

Oracle said the current I-flex management team will continue to run the company and will align its product development, sales, marketing and services activities with those at Oracle. The I-flex service organisation will continue to work with major banks around the world. Charles Phillips, an Oracle co-president, will join the I-flex board, and I-flex stock will continue to trade on the Bombay Stock Exchange and the National Stock Exchange of India.

Banking software is seen as an important area for Oracle. I-flex provides software and services to 575 banks in 115 countries.

CEO Larry Ellison said in a statement: "Banking is a strategic industry for Oracle, with nine out of the top 10 banks already running Oracle ERP applications.

"Oracle's overall application strategy is to go beyond [enterprise resource planning] and offer customers richer industry-specific functionality. I-flex gets us there in banking."

In addition, Oracle said it will offer to purchase an additional 20 per cent of the shares outstanding from the remaining shareholders at a price of about $20.28 (882.62 rupees) per share, beginning on or around Wednesday. The total cash value of the deal will be $316m if the entire 20 per cent is tendered into the offer.

The transaction, which is subject to regulatory approvals, is expected to close by the end of 2005, Oracle said.

Mike Ricciuti writes for CNET News.com