Oracle Corp. agreed to buy Sun Microsystems Inc. for about $7.4 billion in cash, swooping in after the server maker�s talks to be acquired by International Business Machines Corp. failed.
Oracle will pay $9.50 a share, 42 percent more than Sun�s closing price on April 17. Oracle plans to make Sun a profitable part of its business and said the purchase will add $1.5 billion to operating earnings, excluding some items, in the first year.
The takeover moves Oracle, the world�s second-largest software maker, into the market for server and storage computers, pitting the company against IBM and Hewlett-Packard Co. Oracle Chief Executive Officer Larry Ellison also gains Sun�s Java programming language and Solaris operating system, which work with its top-selling database program.
�They�re really going to zero in on just the most strategic part of Sun�s hardware business,� said Heather Bellini, an analyst at UBS AG in New York, with a �buy� rating for Oracle�s shares. �They�ll end up making the company much better run.�
Excluding Sun�s cash and debt, the deal is valued at $5.6 billion, Oracle said in a statement. Sun had about $2.6 billion in cash and marketable securities, and about $700 million in long-term debt at the end of 2008. Oracle has about $11.3 billion in cash and marketable securities.
Sun, based in Santa Clara, California, rose $2.46, or 37 percent, to $9.15 in Nasdaq Stock Market trading at 13:50 p.m. New York time. Oracle, based in Redwood City, California, dropped 41 cents to $18.65.
(Bloomberg.com)
