The New York Times today reports that IBM has withdrawn its offer of $7 billion for Sun Microsystems.
Last week, talk of IBM’s Sun acquisition hit an all time high. With news that the latter was letting staff go in order to slim down for the buyout, and then reports that IBM was put forward a $9.50 per share or $7 billion offer. On Friday the New York Times reported that IBM was all set to fork out $7 billion for longtime rival, Sun. Citing people familiar with the discussions (and not authorized to speak publicly, oops), IBM was reportedly offering $9.50 a share, down from a bid of $10 a share. Sources said the new agreement would restrict IBM’s ability to walk away from the deal.
Yesterday the NYT reported that IBM had taken the $7 billion offer off the table. Apparently Sun’s board balked at the offer and IBM withdrew.
According to the Times, IBM reduced it’s offer from $9.55 per share to $9.40 on Saturday, following a legal review. The offer was then presented to Sun’s board on Saturday, and the board recoiled. While the offer was not rejected the right off the bat, the NYT reports that Sun wanted wanted certain guarantees that IBM considered “onerous.” Sun then said it would no longer abide by its exclusive negotiating agreement with IBM and on Sunday, IBM withdrew its offer completely.
The weekend’s events leave the fate of Sun hanging in the balance. While the company has opened itself up to other potential buyers, previous reports of the deal with IBM made it sound like a sure thing and it seems premature for Sun to have shunned the company during what would have been the final stages of a long sought after agreement.
Bloomberg reports that Sun shares slumped as much as 28 percent in European trading after the news. Sun’s shares rose more than 2 percent, to $8.21 last week following news of the $7 billion offer.
