Oracle (ORCL) Screws IBM (IBM), Buys Sun (JAVA)

Larry Ellison, who built his reputation on being bad and bold, just got badder and bolder. His Oracle (ORCL) bought Sun (JAVA) making an end-run around IBM (IBM), which had hoped to pick up the server company and was close to an offer three weeks ago. Whatever rug may have been under the IBM deal got pulled out.

The buyout continues a long string of large acquisitions by Oracle and gives it a large footprint in the server market. Oracle is already the largest provider of enterprise software in the world, so it can sell Sun servers to its existing customer base.

Oracle and Sun Microsystems entered into a definitive agreement under which Oracle will acquire Sun common stock for $9.50 per share in cash. The transaction is valued at approximately $7.4 billion, or $5.6 billion net of Sun’s cash and debt.

That is a little less than IBM might have been willing to spend, but it takes what might have been an important chess piece in the global competition for selling technology to enterprises away.

Douglas A. McIntyre