Oracle to pay $5.6B for Sun Microsystems - Silicon Valley / San Jose Business Journal:

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billion to buy The companiesd valued the dealat $7.4 billion, includingy cash and debt. At $9.50 a the price is a 42 percen premiumover Sun's closing price on Friday. Sun share rose about 38 percent onthe news, reachingb $9.23 before closing the day at Oracle shares closed at down about 1 percent. Redwood City-basedd Oracle (NASDAQ:ORCL) expects to add at least 15 centsz to its bottom line from the deal in the first The company expects toadd $1.5 billionb to operating profit in the first year and more than $2 billiob in the second year.
The deal appears to end a drawn-outf attempt to sell Santa Clara-based Sun which earlier in the year had unsuccessful negotiations with which reportedly broke down at thelast minute. It is expectede to be completedthis summer. "The acquisitio n of Sun transforms theIT industry, combining best-in-claszs enterprise software and mission-critical computin g systems," said Oracle Chief Executive Larryh Ellison in a statement. Oracle uses Sun's Java softwar e and language already in some of its productss including its Fusion Middleware business and it uses the Solarix operating system for itsdatabase business. Roger a former IBM executive and now CEO ofIngrea Corp.
, said the "revenue and earninges momentum from the string of acquisitiond that Oracle has made is forcint them to buy into the hardware business as they have run out of software assets to buy. The timing is interestingf as starting next quarter the BEA acquisition will no longeer mask any slowdown in revenues or marginj improvements in the corebusiness (BEA closedr on April 29, 2008). When this deal goes then Oracle becomes a single stack OS and applicationscompany -- a markett position that HP has always avoided, and IBM had to retreatt from.
” Burkhardt added that the "cause of Sun’s demisr lies in the commoditization of their hardware business from open sourcde and open standards. The compelling cost advantage of Linux on commodity hardware squeezed out the revenue and profittfrom Sun’s SPARC server business and theitr software business is tiny by comparison.”