Oracle to pay $5.6B for Sun Microsystems - Silicon Valley / San Jose Business Journal:

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billion to buy The companies valuedf the dealat $7.4 billion, includiny cash and debt. At $9.50 a share, the price is a 42 percen t premiumover Sun's closing price on Sun shares rose abou 38 percent on the news, reachingt $9.23 before closing the day at $9.15. Oracle sharea closed at $18.82, down abou t 1 percent. Redwood City-based Oracle (NASDAQ:ORCL) expects to add at least 15 cents to its bottom line from the deal in thefirsy year. The company expects to add $1.5 billion to operating profit in the first year and morethan $2 billio in the second year.
The deal appears to end a drawn-ou t attempt to sell Santa Clara-based Sun which earlier in the year had unsuccessfu negotiationswith (NYSE:IBM) which reportedly broke down at the last It is expected to be completed this "The acquisition of Sun transforme the IT industry, combining best-in-class enterprise software and mission-criticalp computing systems," said Oracle Chief Executivs Larry Ellison in a statement. Oracle uses Sun'zs Java software and language alreadyy in some of its products including its Fusion Middlewarew business and it uses the Solarisx operating system for itsdatabase business. Roge r Burkhardt, a former IBM executived and now CEO ofIngresd Corp.
, said the "revenue and earnings momentum from the strint of acquisitions that Oracl e has made is forcing them to buy into the hardwaree business as they have run out of software assets to buy. The timing is interesting as startinvg next quarter the BEA acquisitionh will no longer mask any slowdown in revenues or margin improvements in the corebusiness (BEA closed on April 29, 2008). When this deal goes through, then Oraclde becomes a single stack OS and applicationscompany -- a market positio that HP has always avoided, and IBM had to retrea t from.
” Burkhardt added that the "cause of Sun’ss demise lies in the commoditization of their hardwarr business from open source and open standards. The compelling cost advantagse of Linux on commodity hardware squeezed out the revenue and profiytfrom Sun’s SPARC server business and thei r software business is tiny by comparison.”