Oracle Agrees to Acquire Sun Microsystems
The Oracle Corporation, the technology information company, announced Monday that it would acquire a rival, Sun Microsystems, for $9.50 a share, which would value the transition at $7.4 billion. — The deal with Oracle came about two weeks after I.B.M. ended its talks with Sun.
Context & Ripple Effects
Sun had been the subject of a reported $7 billion approach from IBM earlier in April, but those talks ended before Oracle's agreement. The change replaces IBM as Sun's prospective buyer at a higher stated value.
Sun also brings a recently launched Intel-based server, storage and networking portfolio, plus MySQL; Oracle already sells supported Linux based on Red Hat Enterprise Linux. That makes the transaction more than a change in ownership for a single software supplier.
First-order effects
- Sun shareholders are offered $9.50 per share in a transaction valued at $7.4 billion, subject to completion.
- Oracle obtains an agreed path to Sun's server, storage, networking and MySQL assets, while IBM loses its failed route to acquire Sun.
Second-order effects
- Oracle's supported RHEL-based Linux distribution and Sun's Intel-based systems would sit under one owner if the deal closes, making integrated system support a more credible option for customers evaluating those products.
- IBM must respond without Sun's product portfolio after its negotiations collapsed, leaving Oracle as the bidder pursuing the company.
Third-order effects
- If completed, the deal would reinforce consolidation across enterprise software, operating-system support and systems hardware, concentrating more of the technology stack inside fewer suppliers.
- The combination also raises the specialist-absorption question: Sun's distinct products must be maintained and sold coherently within Oracle for the strategic breadth of the deal to translate into customer value.
The trend: Enterprise technology suppliers are using acquisitions to assemble broader control over the software and hardware layers customers buy together.