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Oracle to Acquire Big Stake in I-Flex

From Bloomberg News

Oracle Corp. said Tuesday that it would buy a majority stake in India’s I-Flex Solutions Ltd. for as much as $909 million to add programs that help banks manage loans, accounts and credit risk.

The company will pay Citigroup Inc. $593 million for its 41% stake and is offering public shareholders as much as $316 million for an additional 20%, Oracle Chief Financial Officer Gregory Maffei said.

The purchase, Oracle’s fifth this year, gives Chief Executive Larry Ellison a wider product line for banks, one of the biggest markets for technology purchases. I-Flex’s programs dovetail with Redwood City, Calif.-based Oracle’s software that helps banks run internal operations such as planning, sales and marketing.

Ellison this year has pushed Oracle to spend more than $11.2 billion on acquisitions of big competitors such as PeopleSoft Inc. and small companies with new technology such as TimesTen Inc. He also hired former Microsoft Corp. dealmaker Maffei as his finance chief.

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Shares of Oracle rose 6 cents to $13.58.

The market for banking software may be a good target now. Sales at Bangalore-based I-Flex, which has about 5,500 workers, are forecast to rise 34% this fiscal year as customers including General Electric Capital Corp. install its software.

Demand is rising as banks seek one program that manages everything from savings accounts to credit risk to loan portfolios. Most banks designed their own software and many of those programs are outdated and costly to run.

“When it comes to IT spending, banking is the mother of all industries,” Oracle co-President Charles Phillips said. “They spend a lot on technology.”

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Financial services companies will spend $90 billion this year on information technology, a 3% increase from last year, according to Forrester Research Inc.

Oracle has more than doubled its workforce in India to 6,900 since July 2003. In May, Oracle bought two software development centers.

Oracle has 8,500 banking customers and a client list that includes nine of the top 10 banks in the world, Ellison said.


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