If all this works out, then IBM will be one of the luckiest companies in the world. eWeek has learned a lot of details regarding the IBM-sun acquisition talks, as well as that today, the Sun board is holding another meeting to discuss the talks. The outcome could be that IBM would buy Sun after all – but at a much lower price since Sun’s shares fell 25% after it had broken off the negotiations with IBM.
eWeek has a lot more details on why Sun turned down IBM’s offer. Apparently, Sun’s board , lawyers, and CEO were divided into two groups when it comes to whether or not IBM’s offer should be accepted. A majority group led by CEO Jonathan Schwartz were in favour of the acquisition, but another group, led by co-founder and chairman Scott McNealy were against it. It seems as if the disagreements were quite sharp, and because of the stalemate, they decided to blow off IBM’s offer.
It all broke because they thought the price offered by IBM was too low, but also because of a lack of assurances on IBM’s end of providing full legal support for Sun in current and possible future anti-trust cases. For instance, Sun is currently in a court case with NetApp over the ZFS file system, and the US Securities & Exchange Commission will most likely investigate the possible IBM-Sun deal; the two companies would comprise two-thirds of all high-end data server sales.
Our favourite cuddly “people familiar with the case” have whispered to eWeek that the talks within Sun are set to continue to today, after being shelved for the weekend. There is a possibility that the IBM-Sun deal will still continue, because if it doesn’t, a shareholder revolt could lead to lawsuits. Sadly for Sun, shares of the company have dropped 25% since they blew off IBM’s previous offer, meaning IBM can certainly lower its price.
A triple take-out hit-and-roll with which IBM would steal the end.
It is highly unlikely that IBM can offer a price (much) below their previous offer. In fact, Sun was trading below $5 before the offer was ever heard of, the price was only driven up to the $8-9 region because of the IBM deal which would value Sun at that level. As such, the current drop to $6-7 is not that relevant, Sun is still trading much higher than it was when the talk about the original offer was first making the rounds.
Significant premiums are really par for the course in this type of deal.
Edited 2009-04-08 12:55 UTC
scott is resisting the deal like yang resisted the microsoft-yahoo deal. he wants the best for his baby.
unfortunately his baby is grown up into a monster, like companies do, and its not his baby anymore.
the best thing to do is let the big monster be acquired and destroyed, and start a new baby. that is the way of these things. all good things must come to an end.