Strategic Corporate Finance
June 06, 2010
The database software giant Oracle Corp. (Oracle CP-Analysis Report) announced the completion of its pending acquisition of Sun Microsystems Inc. , a provider of enterprise computing systems, software and services, for $7.4 billion ($9.50 a share) or $5.6 billion net of Sun's cash and debt. Sun has been de-listed from the Nasdaq. Sun’s CEO Jonathan Schwartz is expected to resign as the transition moves forward. (Zacks Investment Research) Sun shareholders were the losers in this deal. According to a poll by the Shareholders Foundation, Inc., an investor advocacy group that does research to shareholder issues and informs investors of securities class actions, settlements, judgments, and other legal related news to the stock market, the majority of the participants (22%) think a price of $13-16 per Java share would be fair to Sun Microsystems investors in case of a takeover, 7% favor a price between $4-$8, 18% favor a price between $9-$12, 14% favor a price between $17-$20, 15% favor a price between $20-$24, 7% favor a price between $25-28, and 18% think the price should be over $28. (Allen) “The acquisition was on hold for nine months pending the European regulator’s approval as it would decrease competition in the database market. However, the regulators approved the acquisition recently after Oracle reassured them that it would support, license and develop MySQL – Sun’s open source database software.” (Shubham) Oracle laid out various strategies for new product launches and the integration of the two companies. With Sun’s acquisition, Oracle will enter the hardware market, where it plans to integrate Sun’s hardware business (the Sparc chip and the Solaris operating system) into its own database and business applications software business. This integration will open up Oracle from its traditional software business model. Oracle plans...