Oracle Flexes Anti-Terror Muscle

Oracle  may be getting into the anti-terror
business.

The company is contributing $125 million in capital to help subsidiary i-flex Solutions finance
the acquisition of Mantas, an anti-money laundering
and compliance solutions company based in the Washington, D.C., suburb of Herndon,
Va.

I-flex, based in Mumbai, India, said it will use $122 million of those $125
million to acquire Mantas.

Barry Vasudevan, a spokesman for Mantus, told internetnews.com that
Mantus will be paired with another i-flex subsidiary, Edison, N.J.-based
Reveleus, which specializes in regulatory compliance and risk management.

Mantas’ solutions, such as money laundering tool Behavior Detection
Platform, play in a market estimated to be worth $20 billion by 2008, i-flex
said in a statement.

According to Ray Wang, principal analyst with Forrester Research,
maintaining Mantas as a U.S.-based company will make it easier for i-flex to
get security clearance when working for the Department of Defense and the
Department of Homeland Security.

“It ties back to money laundering and it ties back to anti-terrorism,” Wang
told internetnews.com. “That’s probably the sell behind this.”

Oracle has been historically strong in government contracts, as was the case
for subsidiary PeopleSoft. Its investment in i-flex only strengthens
that hand.

“They see a lot of synergies in government. Some of the hottest areas are
customer data integration and creating master data management,” Wang
said.

“Now with the banking portion, they can tie these two things together. They can have something very strong for money laundering and homeland security.”

Oracle would not comment for this story.

In addition to government contracts, Oracle is also strengthening itself in
financial services, which it sees as an important vector for growth.

When Oracle bought
its stake in i-flex last summer, it explained
that the acquisition was part of an evolving vertical niche strategy.

Oracle and other enterprise software vendors, traditionally focused
on manufacturing industries, have found religion where vertical industries
are concerned.

Having already tangled with SAP  in the retail
arena, it is likely to lock horns with its rival in other verticals, such as financial services, telecommunications, public sector and business services.

According to Wang, Forrester Research studies show that future IT spending
will be strongest in those four areas.

“Financial services is one of the major battlegrounds for growth for Oracle,
as well as for SAP,” noted Wang.

Under terms of the agreement with Oracle, i-flex will issue approximately
4.45 million equity shares to Oracle under a preferential allotment.

The price of the shares under the preferential allotment will be Rs.
1,307.50 per share, which is the floor price established by the Securities
and Exchange Board of India (SEBI) formula for a preferential allotment as
of the reference date of August 13, 2006.

As required by Indian law, Oracle will make a mandatory open offer to
purchase up to an additional 20 percent of the shares outstanding from the
remaining i-flex shareholders at a price of Rs. 1,475.00 per share in
accordance with SEBI Regulations.

Upon completion of the preferential allotment, Oracle’s ownership in i-flex
is expected to increase from 52.5 percent to 55.1 percent.

The open offer price is based on the SEBI formula for the minimum price of
the mandatory open offer.

I-flex shareholders will meet on Sept. 12 to approve the preferential allotment.

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