The two companies have been negotiating for weeks, ironing out terms of an agreement that would turn I.B.M. into the dominant supplier of high-profit Unix servers and related technology.
I.B.M. is offering $9.50 a share, down from a bid of $10 a share, said people familiar with the discussions who were not authorized to speak publicly. The new agreement would restrict I.B.M.’s ability to walk away from the deal, these people said.
Even at $9.50 a share, the deal would value Sun, based in Santa Clara, Calif., at close to $7 billion. It is close to a 100 percent premium based on Sun’s value before rumors of an acquisition spread last month.
Representatives of I.B.M. and Sun declined to comment. People familiar with the negotiations say a final agreement could be announced Friday, although it is more likely to be made public next week. I.B.M.’s board has already approved the deal, they said.
I.B.M., based in Armonk, N.Y., has spent weeks poring over Sun’s patents and licensing agreements. Some 100 lawyers have been working in a hotel in Silicon Valley on intellectual property matters.
Although in a slump of nearly a decade, Sun is one of the largest sellers of server computers and is known for systems based on its Sparc chips. It has a vast software portfolio, including the Solaris operating system, the open-source MySQL database and the Java programming language.
“Sun has obviously been a lost child for many years, but they have some great assets,” said Rebecca Runkle, director of technology research at Research Edge, an equities analysis business. She said that Sun’s and I.B.M.’s cultures would mesh in their commitment to large research and development projects.
Sun’s software assets would fit into I.B.M.’s long-term strategy of chasing higher-profit software and services sales. It could also give I.B.M. more strength in competing against Oracle, which has sold its database software on top of Sun systems for years.
I.B.M.’s acquisition of Sun would disrupt that long partnership with Oracle. I.B.M. could also undercut Oracle by more actively promoting the free MySQL software, which has become the most popular database software with Internet companies.
Hardware inherited from Sun could present antitrust concerns. I.B.M. faces an antitrust complaint from T3 Technologies over its dominance in the mainframe market. By buying Sun, I.B.M. would gain close to total control over robotic tape storage devices used to file data on mainframes.
Sun has a sales and technology partnership with Fujitsu for the sale of Unix servers. If I.B.M. buys Sun, Fujitsu and Hewlett-Packard will be the combined company’s only major competitors in the Unix market, a possible concern for regulators here and in Europe. Sun faces a patent infringement lawsuit from the storage maker NetApp and has countersued. NetApp has a sales pact with I.B.M.
Silicon Valley executives, including Paul S. Otellini, chief of Intel, have said that Sun has spent months seeking a suitor.
Shares of I.B.M. rose more than 3 percent on Thursday, to $100.82, and Sun’s shares rose more than 2 percent, to $8.21.
This isn't a marriage of equals, we all know who's on top. Sun should know enough to stay in the kitchen, serve up the Java, and otherwise please her man.How many creative, motivated IT people do you know that would respond well to that treatment?
Seriously, don't short IBM. They make the chips that make Mario jump!That fact -- and the future profits expected from it -- is already priced into their stock.
How many creative, motivated IT people do you know that would respond well to that treatment? |
That fact -- and the future profits expected from it -- is already priced into their stock. [...] |
Awright Libman, I'm calling you to the mat. [...] |
I think the buyout will be a good thing in general. |
Suraj.sun writes points to a story in the New York Times indicating that the much-rumored merger (or purhase) that would have united Sun with IBM may have dissolved before it began. Excerpting:
"I.B.M., after months of negotiations, withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun's board balked at a slightly reduced offer, according to a person close to the talks. The deal's collapse raises questions about Sun's next step, since the I.B.M. offer was far above the value of the Silicon Valley company's shares when news of the I.B.M. offer first surfaced last month. .. Since last year, Sun executives had been meeting with potential buyers. I.B.M. stepped up, seeing an opportunity to add to its large software business, acquire valuable researchers and consolidate the market for larger, so-called server computers that corporations use in their data centers.
[...] Now, Sun is free to pursue other suitors, including I.B.M. rivals like Hewlett-Packard and Cisco Systems. Cisco recently entered the market for server computers."
Yer a drama queen, Libman.Yeah I was going to say that Java sucks too. :lol:
I hope Java is dead because java is everything I hate about C++, married with everything I hate about Smalltalk.
Anyway, shorting IBM is out, and GLD is in!
there has been the chance that Java 7 would suck a lot lessWhat, they're finally going to have pointers and structs?
"Fatal Exception's Neil McAllister believes Oracle is next in line to make a play for Sun (http://www.infoworld.com/d/developer-world/what-if-oracle-bought-sun-microsystems-859) now that IBM has withdrawn its offer (http://news.slashdot.org/article.pl?sid=09/04/05/2314207&tid=187).
Dismissing server market arguments in favor of Cisco (http://www.infoworld.com/d/hardware/sun-microsystems-too-good-fail-395) or Dell as suitors, McAllister suggests that MySQL, ZFS, DTrace, and Java make Sun an even better asset to Oracle than to IBM. MySQL as a complement to Oracle's existing database business would make sense, given Oracle's 2005 purchase of Innobase (http://ask.slashdot.org/article.pl?sid=05/10/18/2126237&tid=221), and with "the long history of Oracle databases on Solaris servers, it might actually see owning Solaris as an asset," McAllister writes.
But the "crown jewel" of the deal would be Java. "It's almost impossible to overestimate the importance of Java to Oracle. Java has become the backbone of Oracle's middleware strategy (http://www.infoworld.com/d/developer-world/oracle-sun-chiefs-take-stage-together-091)," McAllister contends.
I've seen companies maintain heterogeneous facilities with very different employee cultures.Bet you all those companies are getting from the acquisition is the ability to consolidate backoffice systems (payroll, etc)
Yer a drama queen, Libman.
I hope Java is dead because java is everything I hate about C++, married with everything I hate about Smalltalk.
Anyway, shorting IBM is out, and GLD is in!
Oracle Corporation (http://en.wikipedia.org/wiki/Oracle_Corporation) (NASDAQ: ORCL (http://www.google.com/finance?client=ob&q=NASDAQ:ORCL)) and Sun Microsystems (http://en.wikipedia.org/wiki/Sun_Microsystems) (NASDAQ: JAVA (http://www.google.com/finance?client=ob&q=NASDAQ:JAVA)) announced today they have entered into a definitive agreement under which Oracle will acquire Sun (http://www.oracle.com/corporate/press/2009_april/018363.htm) common stock for $9.50 per share in cash. The transaction (http://www.oracle.com/sun/index.html) is valued at approximately $7.4 billion, or $5.6 billion net of Sun's cash and debt.
"We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP (http://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles) basis in the first full year after closing. We estimate that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA (http://en.wikipedia.org/wiki/BEA_Systems), PeopleSoft (http://en.wikipedia.org/wiki/PeopleSoft) and Siebel (http://en.wikipedia.org/wiki/Siebel_Systems) combined," said Oracle President Safra Catz (http://en.wikipedia.org/wiki/Safra_A._Catz).
Reporters caught up with Microsoft (http://en.wikipedia.org/wiki/Microsoft) CEO Steve Ballmer (http://en.wikipedia.org/wiki/Steve_Ballmer) in Moscow (http://en.wikipedia.org/wiki/Moscow) to get his take on Oracle's deal to buy Sun Microsystems for US$7.4 billion. Ballmer was at a loss for words (http://www.zdnetasia.com/news/business/0,39044229,62053383,00.htm): "I need to think about it. I am very surprised."
According to a source, IBM (http://en.wikipedia.org/wiki/IBM) hadn't given up on purchasing Sun and was blindsided by Oracle's move. I guess IBM must be regretting playing tough 2 weeks ago (http://www.zdnetasia.com/news/business/0,39044229,62052884,00.htm). Unknown to outsiders, Sun had probably found the Oracle lifeboat before they decided to pull the plug on the deal.
The only thing of value SUNW has is its talent. Period.
Sun Microsystems might have had a chance if the Oracle merger had gone through quickly, but between the DoJ taking its time and the European Commission, which seems to get off on abusing American firms, just plain dragging its feet (http://www.internetnews.com/bus-news/article.php/3837556/EU+May+Delay+OracleSun+Nuptials.htm), that won't happen now. As Sun twists in the wind, unable to defend itself, and Oracle is unable to do anything until the deal closes, IBM is pretty much tearing Sun to shreds (http://www.internetnews.com/bus-news/article.php/3832666). By the time this deal closes, there won't be much left for Oracle. This is not how a Silicon Valley legend should end.
Sun will be shedding 3,000 jobs (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/10/20/MNU31A8AUB.DTL&type=business), roughly 10% of their workforce, as they continue to lose money while waiting for EC (http://en.wikipedia.org/wiki/European_Community) regulators to approve their acquisition by Oracle (http://en.wikipedia.org/wiki/Oracle_Corporation). "Oracle Chief Executive Officer Larry Ellison (http://en.wikipedia.org/wiki/Larry_Ellison) said Sept. 22 that Sun is losing about $100 million a month (http://www.bloomberg.com/apps/news?pid=20601103&sid=aRNZdYUUgQcQ) as the transaction is delayed by the EU (http://en.wikipedia.org/wiki/European_Union) probe."
James Staten, an analyst with Forrester (http://en.wikipedia.org/wiki/Forrester_Research), said, "The longer a cloud of uncertainty hangs over Sun, that drives customers into delays of purchases or into the hands of competitors. This is a very trying time for Sun (http://en.wikipedia.org/wiki/Sun_Microsystems) and Oracle as they wait for an answer."
A spokesman for EU Competition Comissioner (http://en.wikipedia.org/wiki/European_Commissioner_for_Competition) Neelie Kroes (http://en.wikipedia.org/wiki/Neelie_Kroes) said today that she "expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission," and that "a rapid solution lies in Oracle's hands.
A spokesman for EU Competition Comissioner (http://en.wikipedia.org/wiki/European_Commissioner_for_Competition) Neelie Kroes (http://en.wikipedia.org/wiki/Neelie_Kroes) said today that she "expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission," and that "a rapid solution lies in Oracle's hands.
It is only people's livelihood at stake. It is only investor's savings. It is only someone's hopes and dreams, the sweat of their labor.... and $100 million per month.
The EC has presented Oracle and Sun with a statement of objections (http://www.cbc.ca/technology/story/2009/11/10/eu-sun-oracle.html). Despite the promotion (http://developers.slashdot.org/story/09/10/10/1556204/Mickos-Urges-EU-To-Approve-Oracles-MySQL-Takeover) of former MySQL CEO Marten Mickos, the statement seems to focus entirely on what many have feared: MySQL vs. Oracle databases.
From Sun's 8-K SEC filing (http://www.sec.gov/Archives/edgar/data/709519/000118143109050589/rrd256710.htm): "The Statement of Objections sets out the Commission's preliminary assessment regarding, and is limited to, the combination of Sun's open source MySQL database product with Oracle's enterprise database products and its potential negative effects on competition in the market for database products." The EU and the EC are getting a rep for disagreeing with US counterparts (http://developers.slashdot.org/story/09/08/23/125211/DOJ-Gives-Oracle-Approval-To-Buy-Sun).
On Monday afternoon the DoJ reiterated its support (http://www.informationweek.com/news/software/database/showArticle.jhtml?articleID=221601079) for the deal. Matthew Aslett has a helpful timeline (http://blogs.the451group.com/opensource/2009/10/26/everything-you-always-wanted-to-know-about-mysql-but-were-afraid-to-ask/) of the action from the EC.
The European Union has managed to do something that US Presidents often find difficult: to make 59 US Senators from both sides of the aisle agree on something. A group led by John Kerry (D) and Orrin Hatch (R) has sent a letter to the European Union, asking it to wrap up the investigation of the Oracle-Sun merger (http://www.internetnews.com/government/article.php/3849916/US+Senators+Press+EU+to+End+OracleSun+Probe.htm) and let the deal go through. Interestingly, the letter emphasizes the damage the delay and uncertainty are doing to Sun.
The article paraphrases a Gartner analyst, who points out that the Senators' letter "comes from a US point of view and doesn't take into account how the EU operates."
The original article was misquoted. Fixed.QuoteThe article paraphrases a Gartner analyst, who points out that the Senators' letter "comes from a US point of view and doesn't take into account EU communist tyrants."
Shame on you for encouraging government intervention in the free market! Good thing I've always preferred PostgreSQL / SQLite, which aren't as restrictively licensed, and made by people who understand that software freedom comes from competition (and, in the case of FLOSS, from forking), not from violent government force!
To J:
Human rights are not derived from popularity, they are derived from empirical economic facts. Please do yourself a favor and educate yourself on the realities of the free market (Ayn Rand and Murray Rothbard are a good place to start).
Oracle and Sun are legal entities created for the benefit of their shareholders, who have the right to decide whether the two should merge. The government has no right to interfere in that deal any more than it has the right to put you in a concentration camp, and allowing one is a slippery slope toward the other. The EC, like all overgrown Mafia organizations that call themselves "governments", are only concerned with maintaining and expanding their power.
Sun and Oracle are not your slaves, they have no obligation to do anything for you that isn't in their interest. And, "since we're talking about opensource here" (though I do maintain that restrictively licensed / GPL'ed software is not really "free") - just fork it!
To Piyush:
Virtually all economic problems in history were caused by government intervention, and this one is no exception. It mainly resulted from an expansionary monetary policy, and bad regulations forcing banks to give out bad loans. Please educate yourself on all sides of the issue before parroting the statist propaganda that is placed before your eyes by the government.
Claiming that "PostgreSQL (http://en.wikipedia.org/wiki/PostgreSQL) is a FOSS alternative to MySQL and hence Oracle should be allowed to pursue MySQL" is a specious argument, according to Monty Widenius. He fears that Oracle, or someone else, can easily squash PostgreSQL (http://monty-says.blogspot.com/2009/12/help-keep-internet-free.html) by just "buying out" the top 20 developers. The Postgre community has fired back (http://ostatic.com/blog/the-state-of-postgresql-not-so-easy-to-kill), calling that claim ridiculous.
According to the article, "PostgreSQL as a project is pretty healthy, and shows how vulnerable projects like MySQL are to the winds of change. PostgreSQL could die tomorrow, if a huge group of its contributors dropped out for one reason or another and the remainder of the community didn't take up the slack. But that's exceedingly unlikely. The existing model for PostgreSQL development ensures that no single entity can control it (http://blog.endpoint.com/2010/01/state-of-postgres-project.html), it can't be purchased, and if someone decides to fork the project, the odds are that the remaining community would be strong enough to continue without a serious glitch."
Six months after the European Commission had agreed (http://www.h-online.com/news/item/European-Commission-approves-Oracle-s-acquisition-of-Sun-909811.html) that the Oracle acquisition of Sun Microsystems could proceed, at the European Court in Luxembourg, Michael "Monty" Widenius has brought proceedings against the merger. Widenius was the original developer of MySQL (http://www.postgresql.org/) the free and open source database. Sun bought his company MySQL AB (http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article3199272.ece) in early 2008 for $1 billion, and copyright of MySQL then passed to Oracle with the acquisition of Sun.
A report in the (http://www.ft.com/cms/s/2/536df0b4-85f6-11df-9618-00144feabdc0.html) Financial Times says that the European Commission is aware of the action, but does not yet know the grounds. A spokesperson for the Commission has said it will defend its decision in court.
Originally, the European Commission had expressed concerns about the future of MySQL following the acquisition. Eventually these concerns were resolved and permission was given to go ahead. Oracle had promised to continue to develop new versions of MySQL and to release them under the GPL.