IBM cuts Sun takeover price: WSJ

Apr 02, 2009
A sign is posted outside of the Sun Microsystems headquarters in Santa Clara, California. IBM has cut the price of its takeover bid for Sun Microsystems Inc. to nine to 10 dollars a share from 10 to 11 dollars a share, The Wall Street Journal online reported on Thursday.

IBM has cut the price of its takeover bid for Sun Microsystems Inc. to nine to 10 dollars a share from 10 to 11 dollars a share, The Wall Street Journal online reported on Thursday.

The newspaper, citing "people familiar with the matter," said Sun had agreed to accept a lower price "in return for stronger commitments from that it will complete the deal even if it faces intense regulatory scrutiny."

The Journal said Sun was concerned that government antitrust regulators could impose conditions and hold up an agreement for months and it "remains unclear when the two sides will reach a deal."

According to the newspaper, the combined companies would account for 42 percent of total server market revenue and 65 percent of the market for servers based on the Unix operating system.

Sun has a current market value of about six billion dollars and the IBM offer places a value on the computer server company of between 6.7 billion dollars and 7.4 billion dollars.

Several analysts have questioned the benefits for IBM of the purchase of Sun, which owns the rights to the Java programming language and MySQL open source database software, but has been running up big losses recently.

A purchase of Sun would be the largest in the history of IBM and in line with "Big Blue" chairman Samuel Palmisano's recent pledge not to sit back but to engage in "strategic acquisitions."

IBM is one of the few major corporations to have weathered the global economic showdown and ended 2008 with 12.9 billion dollars in cash and marketable securities on hand.

IBM is the largest server manufacturer, followed by Hewlett-Packard, Dell and Sun.

The first reports of an IBM acquisition of Sun came just days after networking giant Inc. announced it too would begin building servers as part of a next-generation data center platform for corporations.

IBM and Sun have declined to comment on the takeover reports.

Sun closed at 8.21 dollars in New York on Thursday, a gain of 2.63 percent, while IBM closed 3.29 percent higher at 100.82 dollars.

(c) 2009 AFP

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User comments : 3

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Disrupted
not rated yet Apr 02, 2009
Bah. Sorry to be so nonchalant with this comment, but... who really cares?

Even for the experienced I.T. person like me, it doesn't even matter anymore which industry giant makes or loses money or who buys and sells who. For me, as long as I have decent job, I'm good.
frajo
1 / 5 (1) Apr 03, 2009
Bah. Sorry to be so nonchalant with this comment, but... who really cares?

I do. I welcome any measure which enables IBM to show a certain greedy company its limits.
Disrupted
not rated yet Apr 04, 2009
Granted. I can understand your point of view. I guess I'm just not that interested anymore, in seeing companies throwing around billions where I have trouble making my full RRSP contribution some years.

In the end, quite a few of these acquisitions don't really effect most of us.