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Sun Microsystems Acquired by Oracle

Michael Santo's picture

Oracle has snatched Sun Microsystems from the jaws of IBM, agreeing to a deal worth $9.50 a share or $7.4 billion ($5.6 billion net of Sun's cash and debt) on Monday.

IBM and Sun earlier seemed set for a deal, but Sun balked when IBM lowered their offer from $10 a share to $9.40. What a difference 10 cents makes, apparently.

Sun (JAVA) stock is up $2.40, or 25.9% to 9.09 at the time of this writing. Oracle is down $0.68 or about 3.5%.

In a statement this morning, Oracle President Safra Catz said that:

"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."

Oracle CEO Larry Ellison added (emphasis mine):

"Java is one of the computer industry's best-known brands and most widely deployed technologies, and it is the most important software Oracle has ever acquired."

On a conference call regarding the acquisition, Larry Ellison said:

“More Oracle databases run on the Solaris Sparc than any other system. We’ll engineer the Oracle database and Solaris operating system together. With Sun we can make all components of the IT stack integrated and work well.”

You can hear a webcast of that conference call for the next 7 days, by the way, here.

In 2008, Oracle "entered" the hardware market with the HP Oracle Database Machine and the HP Oracle Exadata Programmable Storage Server, but this acquisition of Sun has proven shocking to some analysts and is a whole 'nother level of hardware support.

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