Oracle Corp. (NASDAQ:ORCL)
surprised techies Monday, announcing it would
acquire Sun Microsystems Inc. (NASDAQ:JAVA) for $7.4 billion in cash, a 42% premium to Sun's Friday close. The deal moves Oracle into the hardware market in a big way. ZDnet.com says Oracle has been
dabbling in storage appliance with Hewlett-Packard Co. (NYSE:HPQ), but the acquisition of Sun puts the company in an entirely different realm.
Redwood City, Calif.-based Oracle says Java technology is the most important software it has ever acquired. Oracle Fusion Middleware, Oracle's fastest-growing business, is built on top of Sun's Java language and software.
The enterprise software giant's president Safra Catz said in a statement, "We estimate that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined."
IBM Corp. (NYSE:IBM) reportedly held talks to acquire Sun, but those
talks broke down after a price agreement could not be reached. CNBC said IBM looked at Sun's structured contracts, as well as change-of-control clauses that would make an acquisition of the company costly. Most recently, it was reported that Big Blue would
boost an alliance with Brocade Communications Systems Inc. (NASDAQ:BRCD). -
Baz HiralalGo to the storySee the press release
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