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Proxy reveals three-way competition over ownership of Sun


By Alex Handy


 Alex Handy
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July 16, 2009 —  (Page 1 of 3)
Before Sun Microsystems' shareholders approved its sale to Oracle today, the company was also being pursued by IBM. But a proxy statement filed during the negotiations indicates that a third company was in the running, and that company was possibly Hewlett-Packard.

The proxy, filed in June by Sun, contained an extensive blow-by-blow account of the merger and its preceding negotiations. On Nov. 6, 2008, IBM initially approached Sun CEO Jonathan Schwartz and an unnamed Sun board member to discuss a possible merger. As the board began to discuss the offer, it also instructed management to approach a second company, called Party B.

Multiple sources have fingered Hewlett-Packard as Party B, but no one at Sun or HP would confirm it.

Party B was not financially able to make a merger happen when it was approached in mid-December. Sun's proxy statement said that Party B was interested in the merger, however, and continued to be at the periphery as negotiations with IBM continued and until Oracle finally reached an agreement to acquire Sun in April.

A long deal coming
The official negotiations with IBM began on Dec. 19, when both it and Sun entered into a confidentiality agreement and began due diligence processes.

On Jan. 28, IBM delivered its first preliminary offer of between $8.40 to $8.70 per share. At this time, Sun's board of directors appointed a committee to investigate the proposal, headed by Sun board member and former Intuit CEO Stephen Bennett, to head the committee.

Party B returned to the table on Feb. 12, and by Feb. 18, it also entered into a confidentiality agreement and began due diligence on a potential acquisition. Perhaps in reaction to that negotiation, IBM returned two days later with a $10-per-share offer.

But on Feb. 23, Scott McNealy, chairman of the board of directors at Sun, chatted with Oracle CEO Larry Ellison about a potential acquisition. On Feb. 26, however, IBM secured exclusive rights to negotiate with Sun. Before signing, Party B was encouraged to make an offer, but declined.


Related Search Term(s): Hewlett-Packard, IBM, Oracle, Sun

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