Sun Microsystems Rejects IBM Buyout Offer

[malware]

In March IBM was reported to be in the midst of negotiating to acquire Sun Microsystems. On the time of the publication there was no more to talk about, but on Saturday IBM finally made a formal bid of $9.40 a share for Sun, or a deal that would have been valued at about $7 billion. Unfortunate for IBM, Sun rejected the offer and has terminated IBM's right for exclusive merger talks, making Sun open for other merger candidates. IBM, in return, withdrew its buyout offer. Two reasons stay behind Sun's decision, one being the belief that the bid was too low, and the other being the terms of agreement, which give IBM too much flexibility in walking away from the deal. It is unclear if a second bid will be proposed by IBM, or will the negotiation between the two companies continue. Representatives from both IBM and Sun declined to comment on an unannounced information.

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[Wile E]

Hell, I didn't even know that IBM was looking to acquire Sun to begin with.

Is Sun in trouble or something?

 

[Binge]

They have been for a while. I don't know why they rejected IBM's offer unless it was under pressure from one of their customers.

 

[Phxprovost]

In all honesty has anyone else even shown any interest in merging with sun? With all the turbulence Cisco is causing it seems like a good idea, though I haven't even heard any rumors of another potential buyer...

 

[laszlo]

wow! 7 billion !!

in a few months due the recession they will accept 5....

 

[Frick]

I kinda hope they come to an agreement. I like IBM and I like Sun and I for one wouldn't really mind a takeover.

 

[WarEagleAU]

Hell I Would have taken 7 billion USD. I dont know of any other, aside from maybe Intel, who could afford such a cost to merge with them.

 

[gerrynicol]

They have all but shut down there manufacturing plant in Linlithgow, Scotland, I had the joy of "leaving" just before christmas. They have not had any real work for a while. They were planning a new high end server, working with fujitsu bit I dunno whats happning with that anymore.

 

[3870x2]

Hell I Would have taken 7 billion USD. I dont know of any other, aside from maybe Intel, who could afford such a cost to merge with them.

It is very affordable for a company like IBM. Remember that even though the buyout was 7 billion, current stocks say $6.57 per share, or a gain of just under 4.9 billion, meaning that in total they really only lose about 2.1 billion in value, which can easily be made back, and probably WILL be made back right after the merger, where people will buy in a frenzy, and drive the stocks up past $10 easy, which is free money for IBM, and they know it. This is why sun (JAVA) are pissed off at the offer.

 

[Haytch]

You ask nicely once, then it becomes a hostile takeover.

Sun Microsystems should have accepted the 7 Billion, it wasnt enough for them, but they should have made it enough.

This time last year their company was @ $17 a share, and its been a slow downhill ever since. Eventually they reached their all-time low in November of last year @ $2.60 a share due to the recession and their many other variables, but managed to balance themselves out and iron out issues.

Sun Microsystems managed to raise the share value since November to the $10 area in just a few short months, and i feel that they started to feel over-confident. As soon as they rejected the 7 Billion takeover, in a matter of moments their shares dropped about 35% to $6.56.

I prefer the two companies remain seperate entities.