IBM Sun Microsystems deal collapses

By Hercules Kataveli, B2P
Published on Sunday April 5, 2009 at 8:46 pm ET
Updated 08-16-11, 3:23 pm ET

The $7 billion IBM Sun Microsystems acquisition talks have failed.

The NYT says IBM lowered its offer to $9.40 per share, down from $9.55, on Saturday, prompting Sun’s board to reject the offer. Sun later said it would void an exclusive negotiation clause with IBM giving opportunity for a buyout with another company.

IBM ultimately completely withdrew itself from the acquisition talks.

IBM lowered its offer to $9.40 per share after an extensive review with a legal team of more than 100 lawyers (not to mention all the other analysts and personnel involved) considered possible antitrust issues. Additionally, IBM lowered its offer because of extensive Sun executive payments that would have been required that IBM somewhat overlooked.

The acquisition would have strengthened IBM’s position as the most dominant supplier of high-end Unix servers.

A deal is still possible over the coming weeks assuming a mutually beneficial agreement can be determined, and given increased pressure from significant Sun investors who favor the deal.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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