The world’s second-largest software company, is said to have put in place a $2bn deal to buyout, lock, stock and barrel an unnamed Indian tech company.
MUMBAI: There’s again a whiff of a mega-deal brewing in the technology space, perhaps one of the biggest deals in the M&A space in India.
Oracle Corporation, the world’s second-largest software company, is said to have put in place a two-billion dollar deal to buyout, lock, stock and barrel an unnamed Indian technology company.
The deal, said to be anchored by Citibank, was signed on Thursday, sources said.
Charles Phillips, president of Oracle, who was in Mumbai last week, said he saw the financial services IT segment to be a bigger bet than even enterprise resource planning.
So who are the domestic financial services players? Patni Computer Systems (where promoters hold 45% stake), Satyam Computer Services, i-flex, Infosys, TCS, Polaris Software and Nucleus Software, among others.
Could the deal be about the rump of shareholding in i-flex solutions held by minority shareholders after Citibank sold its holding for $593 million, and Oracle unsuccessfully made an offer to buy the rest at Rs 882, or another deal as Larry Ellison, the ninth richest man on earth, wriggles into the happening world of Indian technology companies?
Sources said as many as two dozen Citibank officials were holed up in a five-star hotel in Bandra last week, sewing up the deal. Neither Oracle nor Citibank could be contacted for comment.
Who’s selling is the multi-billion dollar question, and it will be clear in the coming days. A lot of names did the rounds initially.
Initial speculation veered around the Sekhsaria and Neotia families selling Gujarat Ambuja Cement stake to Holcim. This was later struck off, as the deal is still a year away from crytallisation, said informed sources — if at all it has to happen.
Oracle’s appetite for Indian technocrats and technologies is well known. In August last year, it struck the biggest deal right under the nose of TCS and Infosys when it made an all-cash deal to buy i-flex Solutions for $593 million (Rs 2,582 crore).
Oracle paid Rs 800 per share to buy Citigroup’s 41% stake in i-flex, an Indian banking software product and services company.
Including the mandatory 20% open offer that Oracle has to make according to Sebi rules, the total size of the deal could go up to about $909 million (Rs 3,958 crore).
The deal heralded the first-ever buyout of an Indian company by a multinational behemoth and is viewed by analysts as a watershed event and the coming to age of India’s software industry.
Addressing an analysts’ conference then, Oracle president Charles Phillips who later took a seat on the board of i-flex, said that from a strategic perspective, the timing of the acquisition was just perfect.
i-flex is still retained as a separate entity by Oracle. According to merchant banking circles the deal could not be for the rump of i-flex shareholding amounting to 57%. This is because i-flex share was trading today at Rs 1142.75, which throws up a value of a little less than Rs 5000 crore for the balance shareholding in i-flex. Again it could also be construed that Oracle is making an offer i-flex shareholders cannot refuse? Or is it something else? Coming days will tell.
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