Following broken-down talks for a buyout by IBM ( IBM ), Sun Microsystems ( JAVA ) has now agreed to an acquisition by Oracle ( ORCL ). The deal is expected to be finalized by the summer.
Oracle’s Sun Acquisition
Oracle will pay about $7.1 billion for Sun. That comes out to $9.50 a share — more than IBM’s $9.40 a share offer last month. Altogether, the transaction is valued at $5.6 billion, taking into account various debts. Sun’s board has given unanimous approval for the deal. It still requires a shareholder sign-off, however, as well as regulatory approval to go through.
Oracle and Sun have been partners for more than 20 years, with Oracle’s Fusion Middleware being built on Sun’s Java protocol and its database business using Sun’s Solaris operating system.
Oracle execs believe the deal will add a minimum of 15 cents a share to the company’s earnings, a projected gain of $1.5 billion in the first year. Already, Sun’s shares were up 36 percent in premarket trading. Oracle’s shares dropped 4.5 percent, while IBM went down by only about 1 percent.
Oracle-Sun Acquisition Analysis
The following Bloomberg video features more analysis on the Oracle-Sun acquisition and what it could mean for the market.
