Oracle to acquire Sun Microsystems

Without Sun's cash and debt, the deal was worth $5.6 billion, the companies said in a statement.

This announcement an agreement comes after two weeks of haggling with International Business Machines (IBM) for a deal that was valued at about $7 billion. IBM had offered $9.40 a share to Sun Microsystems before the companies ended negotiations about two weeks ago.

The current deal pays Sun $9.50 per share, the statement said.

Oracle President Safra Catz said the acquisition would contribute more than $1.5 billion to Oracle's operating profit in the first year, "increasing to over $2 billion in the second year."

Oracle's Chief Executive Officer Larry Ellison said the acquisition "transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems."

The key acquisitions for Oracle include two Sun software assets, Java and operating system Solaris.

Java is "the most important software Oracle has ever acquired," that will allow Oracle to "ensure continued innovation and investment in Java technology," the statement said.

Had IBM acquired Sun, the merger would have resulted in control of more than half of the market for high-end servers powered by the Unix operating system. Sun controlled 31 percent of that market by revenue last year, compared with IBM’s 35 percent, research firm Gartner Inc. in Stamford, Connecticut said.

There is no such hardware overlap between Sun and Oracle, which leads the market in sales of database software. Oracle had 42 percent of the database market in 2007, and IBM had 24 percent, according to Gartner. Sun’s database program, MySQL, held less than 1 percent, Gartner said.

Oracle’s acquisition of Sun will mean far less antitrust scrutiny than a deal with IBM, said Evan Stewart, an antitrust lawyer at Zuckerman Spaeder LLP in New York.

“They will look at this as something that will help Sun survive,” Stewart said. “Having stronger companies competing across a broader spectrum of computer hardware and software markets can only be viewed by the regulators as a good thing.”

- News material from UPI was used for this news.