Oracle buys Sun for $7.4 billion

Oracle to pay $9.50 per share to buy Sun Microsystems

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By  Mark Sutton Published  April 20, 2009

Oracle has swooped on Sun Microsystems, with a $7.4 billion deal to buy the Santa Clara based technology company.

Oracle will pay $9.50 per share for Sun, or $5.6 billion net of Sun's cash and debt, with Oracle predicting that Sun will add $1.5 billion in operating profit in the first year.

The offer was unanimously approved by Sun's board. The deal is expected to be completed by the summer.

The purchase will give Oracle a major launch into the hardware market, where it has previously only had a very limited presence with its Oracle HP Database Machine. Sun’s servers and Solaris operating system have long been an important platform for Oracle’s applications.

The deal will also give Oracle ownership of Java, a major building block in its own middleware platform, plus Sun’s storage systems and software, giving Oracle a comprehensive stack from application to disk. Oracle also gains the MySQL open source database.

Larry Ellison, CEO and co-founder of Oracle 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.”

Sun was most recently linked to a possible buyout by IBM, although the two were unable to agree on a price and IBM walked away from negotiations.

Sun CEO Jonathan Schwartz said in a statement: “The transaction stands to utterly transform the marketplace - bringing together two companies with a long history of working together to create a newly unified vision of the future.

“To me, this proposed acquisition totally redefines the industry, resetting the competitive landscape by creating a company with great reach, expertise and innovation. A combined Oracle/Sun will be capable of cultivating one of the world's most vibrant and far reaching developer communities, accelerating the convergence of storage, networking and computing, and delivering one of the world's most powerful and complete portfolios of business and technical software,” he added.

3038 days ago
Graham Porter

it's hard to see the logic in this deal, 2 very different companies with 2 very different product sets, 2 different cultures and 2 very different financial performances over the last few years. Turning Sun around and making it profitable has been an uphill challenge since 2000 and industry analysts have long insisted that Sun's financial woes are due to its very high R&D spend which reached almost $3b annually at one point, the number of employees it has being too high, a poor acquisition history (StorageTek for $4b about 4 years ago particularly) and an inability to make money from Java, even though it is universally adopted and a thorn in microsoft's side. I can only see 2 possible outcomes here, either Oracle wants to compete head on with IBM in which case it needs not only hardware but a lot more services people or Sun will get cherry picked and asset stripped as Oracle takes what it wants and at $5 billion i would say they got a bargain ! Ultimately it's financial and few companies in IT are really profitable, hence a stunning company like Sun which was responsible for so much innovation and once claimed "we put the dot in dot com" finds itself being acquired.

3039 days ago
KUNAL

Does this mean that Oracle will now have a lawsuit similar to Microsoft wherein they were accused of unfair business practices ?

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