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Oracle to buy Sun, pending approval


By David Worthington
April 20, 2009 — 
After IBM’s offer for Sun Microsystems was turned down by Sun's board, Oracle has announced that it is making an offer for Sun Microsystems in a definitive cash deal that has been unanimously approved by Sun's board of directors.

Oracle is paying a $7.4 billion, or $9.50 per share, market price for Sun's assets, including its cash on hand and debt. Taking those assets into account, MarketWatch's Jeffry Bartash and Christopher Hinton have valued the deal at $5.6 billion. The deal must be approved by shareholders of both companies.

In a conference call with the press, Oracle CEO Larry Ellison said that Java was the most important software that the company had ever acquired. Oracle has made several high-profile acquisitions within the past several years, including BEA Software, PeopleSoft and Siebel Systems.

By acquiring Sun, Oracle is filling a gap in its middleware business, according to MarketWatch. Sun's Solaris operating system and Java offerings round out Oracle's product portfolio to meet virtually every demand a corporate customer might have, MarketWatch said. Oracle may also be able to streamline customer ERP deployments.

"Who is better at installing Oracle Financials and Databases than Oracle?" said Julie Craig, research director for application management at Enterprise Management Associates.

"Packaging the Oracle applications on preconfigured hardware would reduce the risks of 'failed' ERP implementations by enabling companies to buy a preconfigured box and pop it into the data center. Some consulting would still be required to tailor configurations to the company, but it should certainly make the overall process significantly simpler, and therefore cheaper."

Another benefit for Oracle will be obtaining Sun's MySQL business, which was eroding Oracle Database, said Miko Matsumura, deputy CTO at Software AG. He predicts that Oracle is likely to slash Sun's R&D department, discontinue some of its products, including Sun JCAPS, and merge NetBeans with Oracle Java tools.

Craig questioned whether Oracle's control over MySQL could present antitrust problems. However, she predicted that Ellison could successfully neutralize such problems.

"IBM buying Sun would have been messy, but Oracle has no experience, save for partnerships with equipment vendors, in the systems side of the business," said Matsumura. "This is a big change. Oracle is already bursting at the seams from consuming BEA, and this will be many times more complex than BEA. Of course it will be extremely bloody."

Earlier this month, Sun's board of directors rejected IBM's $9.55 per-share bid for the company. According to reports, chairman Scott McNealy opposed the deal.


Related Search Term(s): Oracle, Sun


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Comments

04/20/2009 02:38:11 PM EST

Dear God this is the worst news I have ever heard. Oracle is so going to SOOOO screw up Sun. Aweful Aweful News!

United StatesScott Calkins


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