Oracle in talks to buy Citi stake in i-Flex

The likely acquisition to give Oracle access to core banking solutions business.

Oracle is in talks with the Citi group to buy out its majority 44 per cent stake in software products and services company i-Flex solutions.

If the talks materialise, the acquisition will give Oracle an instant access to core banking solutions and services business. i-Flex's main product Flexcube is the largest selling core banking solutions product.

Based on i-Flex's Friday closing price of Rs 920, the 44 per cent stake acquisition can cost Oracle Rs 3,000 crore. Besides, a 20 per cent mandatory open-offer will cost Rs 1,370 crore. The i-Flex stock has gained nearly 20 per cent in the past one month.

The Oracle spokeperson was unwilling to comment on the issue, while a Citi group spokesperson declined to "comment on speculation". i-Flex executives did not respond to Business Standard queries either.

Oracle is a leading player in the ERP solutions space. The company has two development centers in India - one each in Hyderabad and Bangalore - apart from six sales and marketing offices spread across the four metros and the two tech cities.

The company carries out software development work apart from providing support to its global clients from India. Oracle India has a market share of about 60 per cent in database, and around 8 to 9 per cent in business applications.

i-Flex has a combination of products and services business with products contributing about 54 per cent to sales. In 2004-2005, the company posted revenues of Rs 1,140 crore and earnings before interest depreciation and tax (ebitda) of Rs 277 crore. Net profit stood at Rs 203 crore.

According to analysts, the service business of i-Flex has been growing rapidly. Over the past couple of years, the company has outpaced leading players Infosys, TCS and Wipro in terms of growth rates.