IBM, Sun deal said to be extremely close

IBM and Sun Microsystems are close to a deal under which IBM will acquire Sun Microsystems for about US$9.50 per share, according to a published report.

The New York Times, citing unnamed sources familiar with discussions between the companies, reported the deal could be imminent and announced as soon as today.

The Wall Street Journal yesterday reported that IBM had dropped its takeover price from $10 to $11 a share to $9 to $10, also citing unnamed sources. Sun agreed to the lower price “in return for strong commitments from IBM that it will complete the deal even if it faces intense regulatory scrutiny,” the Journal said, again citing anonymous sources.

Analysts have noted that overlap between the two companies could lead to regulatory issues and the Journal further reported that Sun is also concerned that such matters would keep the deal on hold for an extended period and lead to conditions being imposed for the acquisition to be finalized.

If the two companies join forces, they will have more than 40 per cent of server market share.

A Sun spokeswoman and an IBM spokesman said separately that their companies do not comment on rumours — the standard line in such instances.

Shares in both companies were trading higher late Thursday, with IBM up by 4.14 per cent to $101.65 and Sun up 0.16 per cent to $8.16.

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Jim Love, Chief Content Officer, IT World Canada

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