The EU Blocks Oracle (ORCL) Deal For Sun (JAVA)

Larry Ellison, the CEO of Oracle (NASDAQ:ORCL) is going to have to make some more threats if he wants the EU to approve his company’s deal to buy Sun Microsystems (NASDAQ:JAVA) for $9.50 a share. The Europeans have voiced some concerns that the combined company will have too much market share in the MySQL server software industry.

The EU’s concerns became more concrete today.

Sun filed an 8K with the SEC saying: “On November 9, 2009, the European Commission issued a statement of objections relating to the acquisition of Sun by Oracle Corporation. The Statement of Objections sets out the Commission’s preliminary assessment regarding, and is limited to, the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and its potential negative effects on competition in the market for database products. The issuing of a Statement of Objections allows addressees to present arguments in response to the Commission’s preliminary assessment of the competitive effects of a notified transaction. A Statement of Objections is a preparatory document that does not prejudge the European Commission’s final decision. Any final decision by the European Commission is subject to appeal to the European Court of First Instance.”

Ellison has to decide whether he wants to accept the EU’s “request” or take another action. He could walk away from the Sun deal and probably expect a lawsuit from the smaller company’s board. He could do little or nothing and let Sun bleed to death from its losses. Sun recently cut 3,000 jobs to save money. If Sun wants to put pressure on the EU, it could make its next set of layoffs in Europe.

Ellison is not known for being accommodating. He may simple tell the EU to go to hell. That will be the end of Sun, at least as a viable company.

Douglas A. McIntyre