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Business

IBM cuts Sun takeover price

Latest update : 2009-04-03

The New York Times and The Wall Street Journal reported on their websites that IBM will likely pay between $9 and $10 per share for Sun Microsystems Inc. Earlier discussions involved a price of about $10 to $11 per share.

Reuters - IBM has cut the price of its takeover bid for Sun Microsystems Inc. to nine to 10 dollars a share from 10 to 11 dollars a share, The Wall Street Journal online reported on Thursday.

The newspaper, citing "people familiar with the matter," said Sun had agreed to accept a lower price "in return for stronger commitments from IBM that it will complete the deal even if it faces intense regulatory scrutiny."

The Journal said Sun was concerned that government antitrust regulators could impose conditions and hold up an agreement for months and it "remains unclear when the two sides will reach a deal."

According to the newspaper, the combined companies would account for 42 percent of total server market revenue and 65 percent of the market for servers based on the Unix operating system.

Sun has a current market value of about six billion dollars and the IBM offer places a value on the computer server company of between 6.7 billion dollars and 7.4 billion dollars.

Several analysts have questioned the benefits for IBM of the purchase of Sun, which owns the rights to the Java programming language and MySQL open source database software, but has been running up big losses recently.

A purchase of Sun would be the largest in the history of IBM and in line with "Big Blue" chairman Samuel Palmisano's recent pledge not to sit back but to engage in "strategic acquisitions."

IBM is one of the few major corporations to have weathered the global economic showdown and ended 2008 with 12.9 billion dollars in cash and marketable securities on hand.

IBM is the largest server manufacturer, followed by Hewlett-Packard, Dell and Sun.

The first reports of an IBM acquisition of Sun came just days after networking giant Cisco Systems Inc. announced it too would begin building servers as part of a next-generation data center platform for corporations.

IBM and Sun have declined to comment on the takeover reports.

Sun closed at 8.21 dollars in New York on Thursday, a gain of 2.63 percent,  while IBM closed 3.29 percent higher at 100.82 dollars. 

 

Date created : 2009-04-03