CloudDatacentreGreen-ITInnovationOpen SourceSoftware

IBM’s Sun Acquisition Breaks Down

ibmsun012
0 0 No Comments

Sun Microsystems rejected IBM’s $7 billion bid, according to reports – or is it a negotiation tactic?

IBM’s bid to buy Sun Microsystems appears to have fallen through after Sun rejected IBM’s $7 billion offer, according to reports in the Wall Street Journal.

ibmsun012.jpg

The deal, announced on 18 March, sparked much discussion, and product overlaps in all areas including storage – and also predictions of job cuts.

The reported bid – at about $9.55 a share – was about 89 percent higher than the value of Sun’s shares before discussion of the deal started (though they shot up to around $8.50 by Friday). Both Sun and IBM are still not talking about the deal, but the talks have been going longer than expected, and leaks have suggested that IBM’s “due diligence” research has found less to like about Sun, while Sun has reportedly been unhappy with a proposal which would allow IBM to walk away from the purchase.

This hiatus may simply be negotiating tactics, with Sun trying to raise the price towards the $10 or $11 offer that IBM had supposedly made according to some sources. If so, it’s a dangerous game, as a broken deal will spoil Sun’s reputation: analysts are already describing Sun as “damaged goods” in reports from Reuters.