Mantas is a privately held company headquartered in Virginia with offices in New York, London and Singapore. Its major shareholders include NYSE listed Safeguard Scientifics and SRA International. Mantas provides anti-money laundering (AML) and compliance software and services with a customer base which includes ABN AMRO, Barclays Capital, Charles Schwab, Citigroup, Credit Suisse and Merrill Lynch. i-flex and Mantas are well known to each other. The two companies have been jointly offering AML as well as fraud detection, trading compliance and broker surveillance solutions to banks and financial institutions worldwide since April 2004. Jefferies Broadview, a division of Jefferies & Company, acted as advisor to Mantas on the transaction.
Oracle will invest about $125 million in i-flex to fund the acquisition. The investment will be by way of a preferential allotment of 4.45 million i-flex shares to Oracle. The pricing of this preferential allotment will be at Rs1307.50 ($28.42) computed as per the SEBI guidelines. Post the preferential allotment OracleÆs ownership in i-flex will increase to 55.1%.
Oracle acquired i-flex in August 2005 when Citigroup Venture Capital sold its 41% stake in the company to Oracle for $593 million. Mumbai-headquartered i-flex makes analytical software for banks and ebanking tools û its flagship products include Flexcube, Reveleus and Daybreak. As with the current Mantas transaction Oracle and i-flex were already partnering each other in specific areas when Oracle acquired i-flex. In compliance with IndiaÆs takeover guidelines Oracle then made an open offer to acquire 20% of the outstanding shares of i-flex, which is Bombay Stock Exchange listed. Oracle was prepared to commit another $316 million to secure the 20% and take its shareholding to 61%. However, markets were at a bullish stage and Oracle managed to pick up only 2% in the open offer. Oracle announced completion of the acquisition in December.
Oracle has been acquiring shares of i-flex in the market since it acquired the Citibank stake, thus taking its stake to the current level of 52.5%. As per Indian ôcreeping acquisitionö guidelines Oracle is only allowed to acquire 5% shares in a year before an open offer to minority shareholders is triggered. Hence, in an unusual twist, pursuant to the preferential offer announced, Oracle also announced it would be making an open offer to i-flex shareholders for 20% of the outstanding shares. The open offer will be priced at Rs1475 per share, as per the SEBI formula. DSP Merrill Lynch will act as manager of the offer.
i-flex shares reacted positively to both pieces of news: the Mantas acquisition and thereafter Oracle's open offer announcement. The share moved up 5.11% to Rs1389 in early trading on Monday morning before closing the day at Rs1377, up 4.23%.