Report says Sun rejects IBM takeover bid
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According to The Wall Street Journal's website, the planned takeover of Sun Microsystems Inc by IBM is on the verge of collapse, Sun having reportedly broken off negotiations. Last week, IBM cut the price it was willing to offer for Sun.
AFP - IBM's seven-billion-dollar takeover bid of Sun Microsystems Inc appears to be on the verge of collapse, the Wall Street Journal reported on its website Sunday, citing people familiar with the talks.
The daily reported that "a person familiar with the situation" said that Sun has sent a notice terminating IBM's agreement for exclusive negotiations on a buyout, effectively breaking off the talks.
In return IBM has withdrawn its offer to buy Sun, said a person with knowledge of the transaction, the financial daily reported.
Sun's board rejected a formal acquisition offer by IBM on Saturday, believing that Big Blue's offering price was too low, according to the Journal.
IBM last week cut the price of its takeover bid to between nine and 10 dollars per share.
According to the newspaper, the combined companies would create a virtual juggernaut, accounting 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 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 slowdown, ending 2008 with 12.9 billion dollars in cash and marketable securities on hand.
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