IBM talks to buy Sun Microsystems fall apart

April 6, 2009

(ChattahBox) -— IBM Corp. reportedly has withdrawn its offer to buy Sun Microsystems Inc. this weekend.

Talks were in their final stages in recent days, but reportedly Sun’s board rejected a formal offer of $9.40  per share from IBM on Saturday, saying that the price was too low. The offer was down slightly from the original price of $9.55  which valued the company at around $7 billion.

Big Blue took its offer off the table after Sun terminated IBM’s status as its exclusive negotiating partner, according to people familiar with the situation.

The deal would have been likely to prompt an antitrust challenge because a combined IBM and Sun would have a 42 per cent share of the computer server market.

The Wall Street Journal reported that Sun had demanded assurances from IBM that it would proceed with the deal in the face of regulatory challenges, fearing IBM’s offer left too much room for it to walk away.

The collapse of negotiations is likely to hurt Sun’s shares as a purchase was regarded as a positive move for the once-feted Silicon Valley company. A deal would also have helped IBM compete more effectively against rivals such as Hewlett-Packard.

It’s still possible though that negotiations could resume.


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