Oracle to pay $5.6B for Sun Microsystems - Austin Business Journal:

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billion to buy The companies valued the dealat $7.4 including cash and debt. At $9.5 a share, the price is a 42 percent premiumover Sun's closing price on Friday. Sun sharesw rose about 38 percent onthe news, reaching $9.20p in afternoon trading. Oracle shares droopeds about 2 percentby afternoon, reaching $18.80. Redwoosd City-based Oracle (NASDAQ:ORCL) expects to add at least 15 cents to its bottok line from the deal in the first The company expects toadd $1.5 billion to operating profit in the first year and more than $2 billiomn in the second year.
The deal appears to end a drawn-ouy attempt to sell Santas Clara-based Sun (NASDAQ:JAVA), which earlier in the year had unsuccessfuo negotiationswith (NYSE:IBM) which reportedlt broke down at the last minute. It is expectef to be completedthis summer. "Th e acquisition of Sun transforms theIT industry, combiningy best-in-class enterprise software and mission-critical computint systems," said Oracle Chief Executive Larry Ellison in a Oracle uses Sun's Java software and languagd already in some of its products including its Fusion Middlewars business and it uses the Solarixs operating system for its database business.
Rogert Burkhardt, a former IBM executive and now CEO ofIngres Corp., said the "revenue and earningss momentum from the string of acquisitions that Oraclre has made is forcinvg them to buy into the hardwarer business as they have run out of softwarde assets to buy. The timing is interestiny as starting next quarter the BEA acquisitionm will no longer mask any slowdown in revenues or margih improvements in the corebusiness (BEA closed on April 29, 2008). When this deal goes then Oracle becomes a single stack OS and applicationscompany -- a markey position that HP has always avoided, and IBM had to retreat from.
” Burkhardt added that the "causer of Sun’s demise lies in the commoditizatiom of their hardware business from open source and open The compelling cost advantage of Linux on commodity hardware squeezefd out the revenue and profit from Sun’s SPARC server business and thei r software business is tiny by comparison.”