Oracle to Acquire Sun Microsystems in Deal Worth $7.4 Billion

Authored by Mark Hefflinger on April 20, 2009 - 7:12am.

Redwood Shores, Calif. - In a move that caught most analysts by surprise, business software giant Oracle (NASD: ORCL) said on Monday that it will acquire Sun Microsystems (NASD: JAVA), the struggling server maker, in a deal worth $7.4 billion. IBM (NYSE: IBM) had long been considered the frontrunner to acquire Sun until last week, when talks reportedly broke down.

Under the deal, expected to close this summer, Oracle will pay $9.50 a share, or $5.6 billion in cash, not including Sun's cash and debt.

The two companies have been partners for more than two decades, with Oracle using Sun's Java language and software and Solaris operating system as the basis of some of its core products.

Oracle called the software the "most important [it] has ever acquired."

"Oracle will be the only company that can engineer an integrated system -- applications to disk -- where all the pieces fit and work together so customers do not have to do it themselves," said CEO Larry Ellison.

Oracle had been searching for a buyer for several months, with the recession taking a toll on its server sales.

The company has posted losses in three of its past four quarters. Earlier this month, IBM reportedly withdrew its $7 billion takeover bid for Sun after the company deemed the price too low.

Through Sun reportedly attempted to reopen negotiations, sources close to IBM last week told CNBC that the company, fearful of a lengthy government review, no longer would consider a deal at any price.

http://www.oracle.com

http://www.sun.com