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IBM, Sun Acquisition Deal Collapses

The New York Times today reports that IBM has withdrawn its offer of $7 billion for Sun Microsystems.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.

  • eklipz330
    this is good, you can't just BUY the sun, ITS THE SOURCE OF ALL LIFE FOR GOD SAKES!
    than they would start charging for sunlight per hour, and gosh it would just be a terrible mess after that
    Reply
  • good job yahoo...i mean sun.
    Reply
  • igot1forya
    aerjesrjsedrjgood job yahoo...i mean sun.
    LOL Exactly!
    Reply
  • Greatwalrus
    Noooo, I felt like IBM was the best chance to save Sun's products :( (ie. Open source Open Office). But I guess it would be better if they would just not sell in the first place, unless they really need to.
    Reply
  • squatchman
    ah... damnit I should have shorted their stock. Look at that bastard fall.
    Reply
  • Pei-chen
    What ever happened to the Yahoo, MS deal anyway? Did Yahoo rejected MS's offer and have to settle for lower as expected?

    I think SUN is over its head if it thinks other company (read, Google) is going to come in and saves it.
    Reply
  • kyeana
    hmmm...wonder what happens to java from here
    Reply
  • eddieroolz
    I lost $200k in stocks! Virtual, of course...but still, $200k drop in one day! :(
    Reply
  • megamanx00
    The fools, fools I say. The unrealistic expectations of the board is one of the major reasons the company is in a downhill slide in the first place. They will be kicking themselves when they go bankrupt or someone buys the company for $5 a share.
    Reply
  • Greatwalrus
    megamanx00The fools, fools I say. The unrealistic expectations of the board is one of the major reasons the company is in a downhill slide in the first place. They will be kicking themselves when they go bankrupt or someone buys the company for $5 a share.
    Yep, I agree. Stupid decision, unless a miracle can happen for them - stocks are down 25% at the moment.
    Reply