Sun to be bought by Oracle, not IBM

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In a blow to a rumoured deal with IBM, Sun Microsystems has announced that Oracle has agreed to buy the Java and MySQL owner for US$7.4 billion, or US$9.50 per share – a 10 cent increase to what IBM was bidding for, in a shocking announcement that managed to send Sun’s share up by nearly 37 percent.

The board has unanimously approved the deal – unlike the rejection of the IBM bid – and the company’s shareholders will have to vote on the merger. It has been widely thought that IBM and Sun would make a deal, but a rift was between the two companies on whether to let them have a way to back out of a deal on not.

This will now make the combined company the owner of Sun’s MySQL, Java and OpenSolarias; and now Oracle’s hardware assets and other acquisitions that it made over the past years.

“The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems,” Oracle CEO Larry Ellison said in a press statement.

“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.”

“This combination is a natural evolution of our relationship and will be an industry-defining event,” Sun’s chairman Scott McNealy said.

“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,” the CEO of Sun, Jonathan Schwartz, said in a press release.

It has been widely touted that Sun needed a bigger player to merge with, like IBM. However, Oracle is now a more logical choice as its server systems have been sold alongside Oracle’s database products. The new company will now be able to merge the software and hardware aspects of both companies.

“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,” Schwartz said.

“Together with Oracle, we’ll drive the innovation pipeline to create compelling value to our customer base and the marketplace.”

However, Sun has posted losses in the past three quarters, out of four. Oracle, however, believes to be able to pay off the deal very quickly, even in this economic climate.

Shares in Sun Microsystems (JAVA) went up by an unprecedented 36.77 percent when the market closed, a skyrocketing number, to close on US$9.15. The deal is expected to close on August, depending on regulator approval – and will add 15 cents to the share value of Oracle.