I.B.M. Withdraws $7 Billion Offer for Sun

The New York Times ^ | April 5, 2009 | STEVE LOHR and ASHLEE VANCE

[Ernest_at_the_Beach]

I.B.M. withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun’s board balked at a reduced offer, according to three people close to the talks.

The deal’s collapse after weeks of negotiations raises questions about Sun’s next step, since the I.B.M. offer was far above the value of the Silicon Valley company’s shares when news of the I.B.M. offer first surfaced last month. Sun, an innovative pioneer in computer workstations, servers and Internet-era software, has struggled in recent years and spent months trying to secure a suitor.

With I.B.M. and others shying away from a deal, a bruised Sun could be forced to continue pursuing a solo business model whose prospects have been questioned by many analysts.

Had it bought Sun, I.B.M. would have become the dominant supplier of high-priced Unix servers and gained the rights to a number of popular business software franchises, including the Java technology used on many Web sites. The deal would have also helped I.B.M. compete against the hardware breadth of rival Hewlett-Packard and given it some momentum to combat Oracle’s ever-expanding business software empire. However, I.B.M. also faced the likelihood of antitrust reviews tied to the stronger positions in Unix servers and mainframe storage that it would have gained under the deal.

I.B.M. had a team of more than 100 lawyers conducting due-diligence research on potential problems in a purchase of Sun, ranging from those antitrust concerns to Sun’s contracts with employees and I.B.M. competitors.

After the legal review, I.B.M. shaved its offer Saturday from $9.55 a share, the proposal on the table late last week, to $9.40 a share, said one person familiar with the talks.

[Ernest_at_the_Beach]

fyi

[mnehring]

With JAVA dropping, I wonder if IBM may move for a hostile and grab her up at a lower price?

[NoLibZone]

In a world in which I7’s with three GPU cards can keep up with a SUN, 1 billion is too much.

[theFIRMbss]

>With JAVA dropping, I wonder if IBM may move for a hostile and grab her up at a lower price?

The time of the communication with the help of homing pigeons is long gone, and even the Vatican has to adopt modern technologies to deal with its communication requirements. And so, Vatican announces that their networks will be run by Sun Microsystems and the JES (Java Enterprise System) solution.


Maybe a white knight
is waiting to rescue Sun
if it looks too bleak . . .

[Oldpuppymax]

Why pay 7 billion for something that Hussein might confiscate the following day?

[Ernest_at_the_Beach]

I wonder if Cisco made a better secret offer?

[Ernest_at_the_Beach]

H/T to hardOCP:

Sun following the IBM deal collapse: Customer confusion en route

***************************EXCERPT*************************************

Sun Microsystems won’t be acquired by IBM after all. Now the explaining—mostly to customers and shareholders—really begins.

Sun will tell its customers that the IBM deal was just a slight detour and that the company’s plan to be a pivotal hardware, cloud computing and software provider remains intact. The big question is whether customers will buy Sun’s talk—not to mention Sun’s gear. For shareholders, Sun has to explain why it split over the IBM offer.

[Veto!]

I’m wondering about a better offer too.

[Ernest_at_the_Beach]

More:

Meanwhile, the Wall Street Journal is reporting Sun’s board is split (Techmeme). CEO Jonathan Schwartz wants the IBM deal. Chairman and Sun founder Scott McNealy doesn’t. Guess who wins that one? McNealy, who is dead wrong by the way, will return armed with quips and probably bring the company back to its hardware roots. It won’t matter. But Sun customers only need to know one thing: Schwartz’s strategy (see the stack at right) focusing the company on software is in flux.

[Ernest_at_the_Beach]

See #10.

[USS Alaska]

When the sun sets, their shareholders are going to be hopping mad at the board.

Those people are going to lose 50% of stock value and sun is going the way of so many other hardware makers.

Where is DEC, Prime, Burroughs, Honeywell, RCA, and the list goes on and on and on.......

McNealy's pride wouldn't let him cash out to IBM, but his shareholder's will pay the price.

[Ernest_at_the_Beach]

Look for Cisco to pay less money, but give McNealy, a cushy job.

[Brookhaven]

You pretty much nailed it. Sun overplayed its hand, and now is left with nothing.

[BlueMondaySkipper]

Where is DEC, Prime, Burroughs, Honeywell, RCA, and the list goes on and on and on.......

You forgot Wang. It's never a good idea to forget wang...

[ShadowAce]

I'm currently on-site installing a cluster, so I may not be able to respond to pings this week.

[stainlessbanner]

Is it Schwartz taking Sun in the wrong direction or is it baggage from McNealy?

[Golden Eagle]

Is it Schwartz taking Sun in the wrong direction or is it baggage from McNealy?

Schwartz tried to turn Sun into a software company that gave it's software away for free, which is as dumb as it comes. Of course he had little choice since the free foreign clone Linux continues to be accepted in place of the American original UNIX despite it's questionable sources/supporters.