IBM very close to buying Sun for around US$5bn

3 Apr 2009

It is understood that talks between IBM and Sun Microsystems are very close to conclusion, in a move that will give Big Blue considerable edge in the server business and bolster it against rivals Dell and Hewlett-Packard.

It emerged in recent weeks that a US$6.5bn offer from IBM would represent a premium of 100pc over Sun’s closing price of US$4.97 a share on 17 March.

It is understood that in recent months, Sun has been approaching a number of technology companies in the hope of being acquired.

According reports, IBM is in the final stages of talks to buy the company, although the asking price may be 10pc lower than Sun originally hoped for.

It emerged in recent days that both computer giants have been laying off considerable numbers of staff.

IBM is planning to let 5,000 people go worldwide, and let go 1,700 people in its Global Business Services division on Monday.

Sun, for its part, announced it is letting 1,400 people go, and there is speculation that this may have been agreed as part of talks with IBM ahead of an acquisition.

A newswire report from AP suggests talks between Sun and IBM are in the final stages, and haggling over the share price is the key reason why the deal hasn’t concluded.

Reports by the New York Times andWall Street Journal yesterday reckoned the deal may be concluded at between US$9 and US$10 a share.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years