It already owns 55% of the company, and in September announced plans that would have taken its share to 75%, offering to pay up to $531m. However, the public offer was delayed and slated for early December.
The fresh offer amounts to around $1.5bn, with Oracle raising the price per share it is offering by 42%, which marked a 20% premium on the closing price of i-flex shares immediately prior to the new offer and 49 times forecast earnings. Investors responded to the new offer by sending the i-flex share price up 17% to its highest ever level.
The decision to increase the offer could reflect limited interest in Oracle’s original plans and a belief by investors that Oracle had something else in reserve. CEO Larry Ellison warned that this offer was the company’s final offer. There will not be another open offer, he said. Attempting to allay investor’s fears for the future, he also said that Oracle would not undertake a delisting for at least the next five years unless i-flex shares sold at a significantly lower price than today.
Putting the infamous PeopleSoft acquisition aside, Oracle is unused to opposition regarding its proposed acquisitions. It is keen to get its hands on i-flex because of the reputation and penetration the banking specialist has in its targeted vertical, and the scope for future growth. It is estimated that around half of banking organizations will update or replace their core systems over the next five years.
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