Oracle to buy Sun for $7.4 billion

After IBM abandoned talked about buying Sun Microsystems, Oracle Corp. stepped up. They are now reporting that they’ll be buying the networking equipment maker in a deal worth $7.4 billion.

Larry Ellison, Oracle Corp.'s CEO. Image: Newscom

Oracle, a Redwood Shores, CA information technology company, will reportedly buy Sun for $9.50 per share in cash. When taking into account Sun’s cash and debt, Oracle says that the transaction total is about $5.6 billion. Earlier this month, IBM has offered Sun $9.40 per share, but they withdrew that offer when Sun cancelled the company’s exclusive negotiation rights.

Although Sun has found success with the development of their Java programming language for websites and mobile phones, they’ve lost $1.9 billion over the last few quarters. Analysts say that IBM was likely hesitant because the two companies overlap in several areas, leading to antitrust issues. There is less overlap issues between Sun and Oracle, but Oracle would benefit from the ability to use Sun’s products in conjunction with their own software.

The transaction has been approved by Sun’s board of directors and is expected to close this summer.