|
Page 3 of 7
Sun on Its Knees
Reports then surfaced that portrayed Sun as desperately crawling back to IBM and beseeching the company to resume talks. IBM was portrayed as staunchly refusing to negotiate further.
The story, which originated on CNBC on April 16, 2009, and was picked up by Reuters and other news outlets, reported that Sun had re-approached IBM to resume negotiations but was rebuffed by IBM.
CNBC 's Jim Goldman paints a picture of IBM wanting to avoid a distastefully prolonged probe by regulators, adding that a source told him that "That's attention that IBM wouldn't want at any price." Another source, he said, "told me it would essentially be a financial 'proctology exam,' that just wouldn't be worth it."
Said Goldman:
"One source tells me that IBM never formally announced that it was in negotiations with Sun because interest was so preliminary, that news of the possible deal broke pre-maturely as IBM was in the midst of its very early due diligence. Once the company was made aware of the likely government resistance to the deal, IBM balked. Further, as Sun pressured IBM to maintain a certain price, IBM executives became even more skittish. "
The deal was now being described as having never been serious on IBM's side. Moreover, said Goldman, "I'm told from one source that Sun is available now virtually at any price, but that IBM may not be interested in Sun at any price. "
The account in Sun's SEC filing tells a different story. According to Sun's record, the roles of invited and invitee were reversed, with IBM inviting Sun to resume discussions. In Sun's account, IBM remains quite interested in buying Sun, but at a reduced price and under terms Sun finds onerous. Moreover, it is Sun that rejects IBM's terms in Sun's chronicles. Sun's account seems reliable, and with the deal done, there seems no reason for Sun to lie in its SEC filing.
Regardless, the IBM-Sun deal that had seemed so done had become completely undone.
To outsiders, Sun's prospects looked bleak. "Sun Microsystems," said CNBC's Goldman, "appears to be down to its last option as far as a white knight is concerned, but the problem is, that knight has gotten on its horse and ridden away."
"An outside shot has EMC as a possible suitor for Sun," said CNBC's Goldman, "but 'outside shots' might be all that's left for this once mighty Silicon Valley stalwart."
But Wait...
As in a fairy tale, a white knight appears at the darkest moment to rescue Sun. The white knight in this case is Oracle.
The tale ends happily for Sun on April 20, 2009, about two weeks after the IBM-Sun talks collapsed, when the announcement is made that Sun was being acquired by Oracle for $9.50 per share.
To observers, Oracle's acquisition of Sun was an unexpected bombshell and was generally reported as such.
"Well, I shouldn't have been surprised, but I was," said Tony Byrne, analyst and founder of CMS Watch.
The Wall Street Journal, under the banner "Oracle Snatches Sun, Foiling IBM," reported that:
"Oracle Corp. struck a surprise deal to buy Sun Microsystems Inc. for $7.38 billion, elbowing aside International Business Machines Corp. in the latest sign that a few well-heeled giants are exploiting the recession to snap up weaker players." "Some analysts," The WSJ reported, "said they were stunned by Mr. Ellison's move, predicting that Oracle may eventually choose to divest Sun's hardware business."
|
