Oracle has increased the price it is willing to pay for an additional stake in i-flex solutions, a vendor of financial software in Mumbai, India.
The move follows a period of sharp increases in company valuations on India's stock market, and Oracle may have felt that increasing its offer was necessary to make its offer more attractive for i-flex shareholders, analysts said.
Oracle, of California, said Thursday said it has increased its offer price to 2,100 Indian rupees (AU$60) per share, including interest. The company also said that it has raised by about 35 percent the number of shares it has agreed to buy in the pending open offer to i-flex shareholders.
The new open offer price is a 42 percent premium to the 1,475 rupees per share that Oracle first offered, and a 20 per cent premium to i-flex's closing stock price on Thursday of 1,751 rupees.
Indian stock markets are booming, and investor expectations are high, said a financial analyst who declined to be named. Oracle may have not found sufficient support for the offer at its earlier price, he said. The price of i-flex's shares has risen by over 52 percent in the last six months.
Oracle informed the Bombay Stock Exchange (BSE) in September that it intended to acquire an additional 20 percent of the equity of i-flex. It already holds a 55 percent stake in the company. Oracle would be paying about $531 million for the additional stake. Oracle subsequently delayed the open date of the offer from Nov. 6 to Dec. 4.
In an statement to the BSE on Friday, i-flex said that Oracle had increased the number of shares it wanted to purchase in the open offer from the earlier 16.63 million to 28.39 million, representing 34.14 percent of the emerging voting capital. An i-flex spokeswoman declined to comment on the new offer.
Oracle will be paying about $1.7 billion for the additional equity if its offer sails through. The open offer closes on Dec. 23.