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AP sources: Sun deal cloudy after IBM pulls offer

Posted April 5, 2009

— IBM Corp. withdrew its offer to buy Sun Microsystems Inc. for about $7 billion this weekend, clouding the prospects for a deal that would shake up the computing industry, The Associated Press has learned.

Talks were in their final stages in recent days, but IBM took its offer off the table after Sun terminated IBM's status as its exclusive negotiating partner, according to two people familiar with the situation. They spoke on condition of anonymity because they were not authorized to disclose the negotiations.

One of these people said the two sides were still talking Sunday.

Armonk, N.Y.-based IBM was believed to be offering about $9.50 per share for Sun. That was about double the price the Santa Clara, Calif.-based server and software maker was trading for when the discussions leaked last month. Sun shares closed Friday at $8.49.

Sun was one of the darlings of the dot-com era but spent most of this decade struggling to find its place, wrestling with huge losses and thousands of layoffs. Sun was widely believed to be seeking a buyer, and analysts were not surprised to learn of the talks with IBM.

But it does not appear Sun has alternative suitors to IBM, which has server and software technologies that could mesh with Sun's.

People familiar with the talks said the companies were haggling over price and Sun's demand that IBM commit to seeing the deal through expected regulatory scrutiny. Antitrust questions would likely come because IBM and Sun would have about two-thirds of a high-end segment of the server market. The combined companies also have about half of the market for machines that store data on tape.

IBM employs some 11,000 people at its campus in the Triangle. Sun has a small presence in the Triangle.

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  • Piny tek Apr 6, 2009

    BIGCHEESECAMATO: Stop projecting your anger on Obama, face IBM directly for outsourcing their business to 3rd world. The poor guy has hardly been in the office for half a year and you are putting every blame you can think of on him. He acquired a filthy office from W!

  • ContinuityMan Apr 6, 2009

    Obama is not the problem with IBM. It's Sam Palmisano, the John Akers fanboy. After Lou Gerstner left, he couldn't get the company headed over the cliff fast enough by slashing Global Services, emphasizing mainframes, and offshoring jobs. BTW, IBM's outsourcing unit always told their clients to NEVER outsource their core competencies - that which differentiated them from their competitors. They didn't drink their own Kool-Aid.

    *Disclosure - former IBM employee who's consulting practice was purged in 2004

  • ThisGuy Apr 6, 2009

    Yeah that's kinda what I am worried about Prime. Sun isn't a big company, but they do have some good and unique products. I would really hate to see the products disappear.

  • Raleigh Boys Apr 6, 2009

    Ripcord, if you look back at the many companies IBM "bought" over the years, the resulting product got tossed into the huge maze of 1-800-call-IBM, the support costs went up, and quality of employees went down. They typically buy a company, then keep a few of the employees and shove the product down into a support dungeon. Sun will lose its uniqueness it has maintained over the years and get assimilated into the collective.

    Oogum boogum, that is Mr. Prime but you can just call me Prime. :-)

  • MyNameIsMud Apr 6, 2009

    "A few words for ALL IBM employees... GET A FRESH RESUME UPDATED AND GET IT OUT THERE before Obama turns this country into a 3rd world and has everyone poor paying high taxes for all the cash he keeps spending. Someone is going to pay for this after his years and yes, its you and me that pay taxes...."

    Get a fresh brain and realize that the US white collar job market (IBM included) has been outsourcing themselves into irrelevance long before Obama even ran for office. If anything, Obama has campaigned on reducing the outsourcing of jobs.

    Oh.....I get it. You just wanted to get in a jibe on Obama the Liberal/Socialist/High taxes....etc.

  • ThisGuy Apr 6, 2009

    Wow.. how exactly did this become political??

    Anyway.. I'm not a huge fan of IBM and I can think of 2 or three companies I'd rather see taking over Sun than IBM. But as far as both companies are concerned, neither is really growing that much from what I can tell, and IBM could probably use Sun's assets as much as Sun could use IBM's. Sun does head up Open Office and Java development, among other things. IBM could use that to get back into some mainstream competition.

  • BIGCHEESECAMATO Apr 6, 2009

    A few words for ALL IBM employees... GET A FRESH RESUME UPDATED AND GET IT OUT THERE before Obama turns this country into a 3rd world and has everyone poor paying high taxes for all the cash he keeps spending. Someone is going to pay for this after his years and yes, its you and me that pay taxes....

  • Ripcord Apr 6, 2009

    "If we had a brain, we would prevent IBM from buying. They will certainly turn around and lay off the Sun employees, and outsource to India."

    Sun has already layed off thousands of employees, which is one of the reasons its actually been seeking out a buyer. And apart from anti-trust concerns I see no reason why IBM should be prevented from buying Sun if they ever come to an agreement.

  • Pseudonym Apr 6, 2009

    I agree 100%. IBM will just ruin Sun.

    BTW, may I call you Prime?

  • Raleigh Boys Apr 6, 2009

    If we had a brain, we would prevent IBM from buying. They will certainly turn around and lay off the Sun employees, and outsource to India.