NYT: IBM and Sun may announce merger on Friday

A merger between IBM and Sun seems all but a certainty now. After breaking the news that the two companies were in talks last month, the New York Times now reports that IBM “is close to a deal to acquire Sun.”

Quoting “people familiar with the discussions,” the NYT says the transaction would see IBM shell out $9.50 per share. Sun shares are currently trading at around $8.20, and they were sitting below $5 before rumors of the buyout started making the rounds. If the NYT’s sources are correct, IBM and Sun may make an announcement about the deal as early as tomorrow.

According to a separate report by the Wall Street Journal, IBM originally offered $10-11 per share, but Sun agreed to a reduced bid “in return for stronger commitments from IBM that it will complete the deal even if it faces intense regulatory scrutiny.” While the NYT claims IBM is mainly interested in Sun’s Java and Solaris software, a merger would nevertheless see the combined entity hold the lion’s share of the *nix server market.

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    • stmok
    • 10 years ago

    I wonder what will happen to:
    * OpenOffice?
    * MySQL?
    * Sun xVM family? (Which includes VirtualBox)
    * NetBeans?
    * Solaris/OpenSolaris?

    • FubbHead
    • 10 years ago

    Just merge in AMD aswell, and then give Intel and Microsoft som love. 🙂

    • AMDisDEC
    • 10 years ago

    This is good and bad news.
    The resultant IBM/Sun corp will be a powerhouse on many levels. A year from now they will probably pick up whats left of AMD and their IP. This would make a good competitor for Intel.
    Bad news is that IBM cares little for the budget market.

      • Flying Fox
      • 10 years ago

      If IBM did not buy AMD before, I don’t see a reason why they will suddenly be interested in buying AMD now. IBM and “commodity hardware” do not generally mix, unless there is services revenue to be had.

        • AMDisDEC
        • 10 years ago

        Before they would have to had taken the company. Today, their is hardly a company to be purchased. Just a pile of CPU IP. Can you say, fire sale?

          • Flying Fox
          • 10 years ago

          To IBM, AMD is just a bunch of CPU IP (let’s forget the GPU stuff for a moment, which is even more cut-throat and commoditized). Remember a lot of AMD’s manufacturing tech comes from IBM already.

          It took IBM some time to get rid of its x86 CPU making ties, I don’t think they want to dip their hands in that pool again. Today IBM is all about services. They will happily let others make the hardware (remember they sold their PC business too) and sell them as a package, again, with services.

          • ludi
          • 10 years ago

          Hold off on the obituary until we actually have a body. The only thing that AMD has which IBM would value — a patent portfolio — is closely tied to exactly two markets, one which IBM recently got out of and one which it has never shown an interest in entering.

          If AMD ever did go into bankruptcy — something their new Arab overlords seem interested in preventing for the time being — then sure, IBM would take a good look at the assets. But so would Intel and Nvidia, which also have cash and an actual interest in the property.

    • just brew it!
    • 10 years ago

    I wonder if IBM will turn around the mess that the OpenOffice and MySQL development efforts are turning into? IBM seems to be pretty good at dealing with Open Source development (being a major contributor to the Linux kernel, among other things).

      • Flying Fox
      • 10 years ago

      There is a mess in OO land?

      I guess I’m too disconnected with that front so I don’t know. Isn’t the idea of open source not letting one person/organization to hijack the whole process?

        • stmok
        • 10 years ago

        With OpenOffice, its not quite true…Because of the way Sun handled the project. eg: If you submit a patch or new feature, Sun employees will re-write your implementation completely. This isn’t “community friendly”…Its like saying “YOU SUCK. I can do this better!”

        IBM understands the open source process, and is more likely to offer a more community friendly approach…Assuming they will hand OpenOffice to the community and make contributions of their own.

        There’s also VirtualBox (also currently owned by Sun)…I wonder what will happen to that?

          • Flying Fox
          • 10 years ago

          VirtualBox is interesting. Now IBM has something “in house” for their server customers in terms of virtualization. Wrap some services around that and they got another solution to sell.

            • just brew it!
            • 10 years ago

            While VirtualBox hasn’t reached (and may not reach any time soon) feature parity with VMware, I find it easier to use, especially on Linux hosts. I prefer it to VMware, when I don’t need any of the VMware-exclusive features (such as guest SMP support).

            An infusion of cash and/or developers from IBM might even allow them to catch up with VMware, making them an excellent all-around virtualization solution.

    • tfp
    • 10 years ago

    But they might wait until Monday too!

    • bowman
    • 10 years ago

    And I just installed OpenSolaris. Great.

    Who wants to guess support for that is going to be chopped right away?

    • eitje
    • 10 years ago

    I don’t know of any other companies that support Java except for IBM & Sun.

    Conspiracy theory: IBM buying a development framework & (another) OS to directly compete with Microsoft in those spaces?

      • UberGerbil
      • 10 years ago

      BEA, Oracle… even HP. There are plenty of Java supporters in the corporate space.

      IBM would appear to be buying talent and marketshare (AIX + Solaris amounts to something like 2/3rds of the non-Linux UNIX market — hello, DOJ/FTC?) at depressed prices. They also pick up some interesting technology (and patents) in the form of Niagara and Rock et al. As far as Java goes there’s a bit of irony: IBM seems able to do a better job of earning revenue from Java than Sun ever did, so that part of Sun is probably less interesting to them. IBM already has too many proprietary OSes it supports — but by that token, what’s one more? You could say the same about CPU architectures and SPARC, but I suspect IBM will hand that off to the Japanese.

      I don’t think IBM really gives a hoot about competing with MS in OSes. That’s last century. IBM is all about services, and they don’t really care what OS they (or their customers) are running. Their proprietary OSes are running on the big iron above the x86 space, and on x86 they’re happy to let Linux lead the fight and ride those coattails.

      If you’re looking at competitive positioning in this deal, I’d say this is much more about IBM distancing itself from HP than anything to do with Microsoft. It’s inevitable consolidation of the Unix market. (And while this deal was almost certainly in the works long before Cisco announced its entry into the server market, IBM may have been anticipating and trying to pre-empt it all the same).

        • Flying Fox
        • 10 years ago

        What I don’t understand is IBM does not seem to want to dip into the hardware business too much. If they are after services, they could have just bought the services division. I suppose McNealy put the foot down and said “all or nothing”.

        The hardware business may not pass scrutiny so they either have to sell it, or slowly let it die. Personally I am not a fan of SPARC but it is still a shame. The Opteron reseller business is completely redundant they definitely need to chop that up and sell it to someone else (Rackable again?). POWER and SPARC architectures are different enough and we will have to see if DoJ will group them both in the HPC market.

        Solaris > AIX marketshare-wise, I won’t shed tears if they decide to kill AIX though. 🙂

          • UberGerbil
          • 10 years ago

          The Solaris/AIX thing is likely to be the biggest hurdle as far as regulatory approval is concerned — assuming they consider “unix” to be a market. From that standpoint killing AIX would make things easier…but I can’t see that happening. “Legacy” might as well be part of IBM’s name.

          Sun is in a position of weakness, and an “all or nothing” demand might be McNealy’s strongest card, but I can’t see Sun’s services division being the jewel in the crown here. It’s true that IBM is getting out of low-margin and commodity hardware, but they’re very interested in fundamental IP. IBM could sell off the SPARC business — Fujitsu might be interested — I can’t see it being part of IBM’s plans. But the talent and IP inherent to Rock and Niagara might be very interesting to them as something to apply to POWER down the road. Likewise the software IP and talent behind MySQL and OpenOffice. That’s all stuff IBM can leverage as part of their soup-to-nuts value-add.

            • derFunkenstein
            • 10 years ago

            I don’t think you really need to kill either, and you can still support both – don’t they both have Linux compatibility layers? If you want to support both AIX and SPARC, just write for Linux.

        • eitje
        • 10 years ago

        I don’t think BEA, Oracle, and HP have spun their own Java VMs & SDKs though, right?

    • ssidbroadcast
    • 10 years ago

    Quick question: Is there any reason NOT to buy the shares at 8.22 (after hours) if IBM buys them at $9.50 ?

    Modifier : It costs me 12.99 to buy any amount of these.

      • no51
      • 10 years ago

      Depends on how long you want to hold on to them, and how much you want to buy and what’s your inve… BUY NOW.

        • ssidbroadcast
        • 10 years ago

        lol, I just checked and it seems that I would only make about $30 bucks in a best-case scenario, given my current constraints. :/

          • khands
          • 10 years ago

          That sucks, too bad you don’t have more capital.

            • ssidbroadcast
            • 10 years ago

            Maybe it’s for the best. On a sidenote, I made a 50% return on WD stocks. Bought them in November and sold them just the other day. Not bad at all, if I do say so myself.

            • no51
            • 10 years ago

            Maybe you should give TR some of that money then Mr. Moneybags.

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