Here’s Lauren McKay’s news story on the acquisition, We’ll have more on this later, of course — over on destinationCRM.com — but for the time being, here’s the skinny and below are some relevant links and excerpts.
In case the problem’s persisting, here’s that same press release, carried on an aggregator site.
Sun Microsystems, Inc. (NASDAQ:JAVA) and Oracle Corporation (NASDAQ:ORCL) announced today they have entered into a definitive agreement under which Oracle will acquire Sun common stock for $9.50 per share in cash. The transaction is valued at approximately $7.4 billion, or $5.6 billion net of Sun’s cash and debt.
“The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems,” said Oracle CEO Larry Ellison. “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.”
There are substantial long-term strategic customer advantages to Oracle owning two key Sun software assets: Java and Solaris. Java is one of the computer industry’s best-known brands and most widely deployed technologies, and it is the most important software Oracle has ever acquired. Oracle Fusion Middleware, Oracle’s fastest growing business, is built on top of Sun’s Java language and software. Oracle can now ensure continued innovation and investment in Java technology for the benefit of customers and the Java community.
• Here’s the Bloomberg News dispatch, already (as of 9.09a ET) up to Update 1, with others likely to follow.
“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,” [Oracle President Safra] Catz said. “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.”
The agreement with Oracle came about two weeks after I.B.M. ended its talks with Sun. The Sun board balked at that deal after I.B.M. lowered its offer to $9.40 a share from $10.
Still, Monday’s deal represented a 42 percent premium over Sun’s closing price of $6.69 on Friday. Oracle and Sun said in a statement that net of Sun’s cash and debt, the deal was valued at $5.6 billion.
Lawrence J. Ellison, Oracle’s co-founder and chief executive, and Scott G. McNealy, Sun’s co-founder and chairman, have been two of Silicon Valley’s closest allies over the last 20 years. Their companies turned into two of the superstars of the Internet build out, and both executives made ribbing rival Microsoft a favored pastime.
Historically, most of Oracle’s database sales have occurred in tandem with Sun’s servers. Over the past few years, however, Oracle has moved to make Hewlett-Packs and Dell stronger allies, as Sun’s business has declined.
Oracle’s Fusion Middleware business is based on Sun’s Java language and software, and Oracle said it could now ensure continued investment in the technology. It will also acquire the Solaris operating system, the leading platform for its database business, which is its largest.
• The Associated Press, via MSNBC:
IBM had offered to buy Sun for $9.40 per share, but acquisition talks fell apart earlier this month. Sun balked at the price and canceled IBM’s exclusive negotiating rights, leading IBM to withdraw its offer….
The IBM talks may have been derailed by antitrust issues since the two companies overlap in several areas. In tape-based data storage, for example, together IBM and Sun would hold 52 percent of a $3.1 billion market.
On a conference call with analysts, Ellison said that Oracle’s acquisitions to date has been to acquire market leaders—PeopleSoft, Hyperion and Siebel. With Sun, Oracle said Java and Solaris are the keepers in the deal. Regarding Java, Ellison said it wanted Sun so it could own the building blocks for its middleware.
UPDATE, 12p ET:
Wall Street Journal blogpost [with a h/t to a PR person who knows my gratitude even if she doesn't want her name used in public]:
“There is no question in my mind that this transaction redefines the industry,” Scott McNealy, Sun’s chairman and co-founder, said during the conference call….
“We have a track record of integrating acquisitions very quickly, and this will be no different,” said Safra Catz, one of two Oracle presidents under Mr. Ellison.
Some analysts said they were stunned by the move, since Oracle has long left it to others to build computers while concentrating on the more-profitable software business. Last year, when it began offering a server integrated with its database software, it did so through an alliance with Hewlett-Packard.
“The last thing you expected was a database-software company to buy a hardware customer base,” said Bruce Richardson, an analyst at AMR Research in Boston. “It’s shocking.”
But apparently Ballmer, who is rarely at a loss for words, didn’t exactly have a sound byte [sic] at the ready. “I need to think about it,” Ballmer told reporters in Moscow, according to Reuters. “I am very surprised.”
I’m hearing that Ballmer wasn’t the only one surprised by Monday’s deal. According to a source of mine, IBM hadn’t given up on purchasing Sun and was blindsided by Oracle’s move.