Discontent with price, Sun rejects IBM's offer

By siliconindia   |   Monday, 06 April 2009, 21:41 IST   |    1 Comments
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Boston: The much-speculated deal between the software firms Sun Microsystems and International Business Machine (IBM or Big Blue) is on the verge of getting dissolved. Sources reveal that Sun has turned down Big Blue's offer as it was not content with the acquisition price. IBM had offered $7 billion for the acquisition, which imply $9.40 per share. The offer was about double the price the California-based server and software maker was trading for, when the discussions leaked last month. The company's shares were at $4.97 on March 17, which rose to $8.49 on Friday as rumors of the deal had hit the market. The collapse of negotiations, if final, is likely to hurt Sun's shares as a buyout was seen as a means of survival for the firm, which has been losing market share. The deal would also have helped IBM compete more effectively against rivals such as Hewlett-Packard. "Sun is now sort of damaged goods. If IBM got under the covers and didn't like what they saw, then what does that mean for other potential buyers?" said Peter Falvey, a Technology Banker at Revolution Partners. Sources maintain that the companies are still on talks about the merger. The scrap of the deal however, may be a boon to the Sun's cloud computing space, in which it had recently ventured. Analysts are of the view that a merger of the two software firms would result in IBM dictating its own strategy on Sun's cloud technology.