Software house edges into server markets with merger
Oracle Corp has surprised the market with news that it is buying Sun Microsystems Inc in a deal expected to close in the coming few months and worth $5.6 billion, net of Sun’s cash and debt.
The deal comes a month after IBM abandoned its bid to buy the ailing software developer and hardware manufacturer.
The transaction has been approved by Sun’s board of directors and will see Oracle buy Sun shares for $9.50 each. That price is marginally better that the offer IBM had supposedly tabled last month and over 40% better than Sun’s stock closed on Friday.
Oracle reckons the merger of Sun into its operations will contribute more than $1.5 billion to its total profit in the first year, and more than $2 billion in the second year.
Oracle CEO Larry Ellison said in a statement: “The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems. 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. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up.”
The company believes that acquiring Sun Microsystems will offer, “Substantial long-term strategic customer advantages to Oracle owning two key Sun software assets: Java and Solaris.”
The Java software, which Oracle has described as the most important software it has ever acquired, should sit nicely with Oracle Fusion Middleware, built on top of Sun’s Java language and software.
Sun Chairman Scott McNealy said: “Oracle and Sun have been industry pioneers and close partners for more than 20 years. This combination is a natural evolution of our relationship and will be an industry-defining event.”
“This is a fantastic day for Sun’s customers, developers, partners and employees across the globe, joining forces with the global leader in enterprise software to drive innovation and value across every aspect of the technology marketplace,” said Jonathan Schwartz, Sun’s CEO. “From the Java platform touching nearly every business system on earth, powering billions of consumers on mobile handsets and consumer electronics, to the convergence of storage, networking and computing driven by the Solaris operating system and Sun’s SPARC and x64 systems.
“Together with Oracle, we’ll drive the innovation pipeline to create compelling value to our customer base and the marketplace.”