Is IBM Going to Buy Sun for $7 Billion?

Posted 03/19/2009 at 12:30pm | by Paul Lilly

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With IBM having moved away from hardware in the past few years in lieu of focusing more on services business, it might seem odd that Big Blue would be interested in acquiring Sun Microsystems. But analysts say it's Sun's software that IBM really has its eye on.

"The technologies of greatest interest to IBM are Java and Solaris, and those are notably not hardware technologies," said David M. Smith, an analyst at Gartner.

According to The New York Times, the dollar amount being discussed comes close to $7 billion. That breaks down to about $10 per share, or twice Sun's closing price a day before news of the negotiations broke out. Immediately following, shares of Sun shot up just shy of 79 percent on Wednesday to close at $8.89.

Should the merger take place, IBM and Sun would account for about 65 percent of the market for server computers running Unix and 42 percent of the total server market. Citing "a person involved in the discussions," NYT reports an antitrust review would be forthcoming, with the issue being how regulators define the server market. When viewed by numbers of server computers sold, the playing field looks a lot more even, as IBM and Sun would only account for 18 percent of the market.

(Image Credit: IBM)