Oracle to buy Sun in $7.4 billion deal
(Credit:
Sun Microsystems)
This story has been updated. See below for details.
Oracle, not IBM, will be buying Sun Microsystems.
Oracle and Sun announced Monday that they have entered into a definitive agreement under which Oracle will acquire Sun common stock for $9.50 per share in cash. That puts the value of the transaction at about $7.4 billion, or $5.6 billion net of Sun's cash and debt.
Oracle President Safra Catz said in a statement:
We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. We estimate that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined.
Sun made its name as a supplier of server hardware during the dot-com heyday, but its best-known technology is software: the Java programming language. In the Monday morning announcement, the two companies said that Java is the "most important software Oracle has ever acquired."
An early take from my colleague Larry Dignan at ZDNet:
My hunch is that (Oracle CEO Larry) Ellison saw the possibilities of integrating hardware and software with Oracle's Exadata database machine. Ellison boasted that the Exadata machine has seen strong demand on Oracle's earnings conference call.
Sun's board has unanimously approved the transaction. The deal is expected to close this summer, subject to Sun stockholder approval, regulatory approvals, and closing conditions.
Last month, reports surfaced that IBM wanted to buy Sun, but Sun didn't like the terms that Big Blue was offering.
Update, 5:59 a.m. PDT: On a conference call to present the deal to investors, Catz emphasized that Oracle expects to make money from its Sun property.
"We intend to ensure that it is profitable," Catz said, having noted that Oracle will combine the software assets quickly after closing the deal. "We believe we will be able to run Sun at substantially higher margins."
In its most recent quarter, Sun reported a net loss of $209 million, or 28 cents a share, on revenue of $3.22 billion. Revenue was down 11 percent year over year.
Also on the call, Ellison said that Java is "critical" to Oracle's middleware and that the company's middleware offerings are on track to be as big as its database business. Sun's Solaris software, he said, is "by far best Unix technology available on market," though he also spoke well of Linux.
Sun Chairman Scott McNealy and CEO Jonathan Schwartz joined Oracle's team on the call.
"We're thrilled to be acquired by Oracle," McNealy said.
Historical footnote, 6:35 a.m. PDT: Ellison didn't always see Sun as a desirable takeover target. In 2003, when Oracle was in the throes of trying to acquire PeopleSoft, Ellison said that buying Sun would be a "bad idea." At Oracle's annual shareholder meeting that October, Ellison said: "I don't think Oracle should be in the hardware business, so I don't think you'll see us buying any hardware companies."
Update, 9:50 a.m. PDT: Sun's shares jumped about 35 percent when the stock market opened Monday to $9.07, following Friday's close at $6.69, and have been holding at about that level through the morning.
Oracle's shares opened about 7 percent lower, at $17.77 versus Friday's closing price of $19.06. The stock has since risen to about $18.60.
Sun's stock jumped around 35 percent first thing Monday on word of Oracle's takeover bid.
(Credit: Yahoo Finance)
Jonathan Skillings is managing editor of CNET News, based in the Boston bureau. He's been with CNET since 2000, after a decade in tech journalism at the IDG News Service, PC Week, and an AS/400 magazine. He's also been a soldier and a schoolteacher. E-mail Jon. 
Now Oracle's has finally achieved Ellison's dream of controlling a full hardware/software stack. It may come ten years too late but he finally got what he wanted.
Of course, as the greeks used to say: be careful what you wish for, you might get it...
Oracle may just be the next CA...
They may still buy RedHat for the other properties it owns (e.g., JBoss) and the significant segment of the commercial Linux market. Arguably, Linux is the successor to proprietary UNIX OSes. Such a buy would give them a bigger foot into that growing market segment.
HTH.
I'm very sure that Google (MySQL's largest and most high-profile user) can build and rally one in fairly short order ;)
You can fork it all day long, but you can't call it MySQL anymore. The trademark is owned by SUN (soon - by Oracle). They may go after you even if you advertise it as "MySQL variant" or so.
You can bet that while MySQL powers Google's search business, it is in no way the stock Open Source database that we all know and love - there just isn't enough power in there for that kind of task.
Given its popularity, there will always be an open-source and free flavor of MySQL for as long as folks want one.
And like someone else posted above - the codebase forking is only half the battle - a major project like this will still die without strong leadership.
"Given its popularity, there will always be an open-source and free flavor of MySQL for as long as folks want one. "
But will there be a BETTER open source and free flavour of MySQL, or will people simple start looking for alternatives? Of course, with the Sun acquisition, I think Oracle also picked up Postgre, the better of the two major Open Source DBs out there.
Yeah - this is kindof scary, isn't it?
* a huge paycheck, and
* total freedom.
Next question?
"But will there be a BETTER open source and free flavour of MySQL, or will people simple start looking for alternatives? "
That answer is simple as well: take what's already there and improve on it. Sorta makes your question moot.
" I think Oracle also picked up Postgre[sic]"
Yep. It's GPL (which means its even harder to control). So?
If Oracle does anything stupid with either of them, they would only own the names, and nothing more.
Long Live Unbreakable Solaris!
Proof right there that Sun doesn't need Oracle to thrive.
Apple also has stock in Xerox, Google, Disney, and Adobe, to name a few. So, how long before these companies all buy enough to be one, large company that just dominates computing? I think about another 15 years or so. It's all slow, and by then, the idiots in charge will all be in their 70s.
Oh, and if you deny this, you are a Micro$oft Apologist and have no voice worth reading or listening to.
In general, owning stocks of another company is one thing... Having control over that company is yet another.
(MySQLis open-source, and therefore pretty much uncontrollable in the classic "we own it" stance. If you try to impose on it, it simply forks and you lose what little control you thought you had).
Michael Dell, you should buy Supermicro so you can can continue to grow as a whitebox pimp, RAC on poweredge sucks and so do you. Walmart could make you a better solutions provider, they spend more on R&D and have better engineers, partner with them more.
Mark Hurd, continue to invest in Itanium, it is the processor of the future and will replace Xeon, SPARC and Power in every server. Sybase, HPUX, and Itanium is the killer combination the world has been waiting for.
Sam Palmisano, you make great laptops.
The key for Oracle is hardware platform they can utilize for cloud computing and exadata hardware so they don't need to rely too much on HP
yes, JAVA and mySQL will make their position stronger and prevent any unexpected moves SUN in IBM hands could do
- by alegr April 20, 2009 12:10 PM PDT
- IBM courted them so hard, but they eloped with Oracle.How impolite.
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