Oracle's Acquisition of Sun Microsystems

Oracle's Acquisition of Sun Microsystems
Case Code: BSTR336
Case Length: 18 Pages
Period: 2009
Pub Date: 2009
Teaching Note: Not Available
Price: Rs.300
Organization: Oracle Corporation, Sun Microsystems
Industry: Information Technology and Related Services
Countries: US
Themes: Mergers and Acquisitions
Oracle's Acquisition of Sun Microsystems
Abstract Case Intro 1 Case Intro 2 Excerpts

"The transaction stands to utterly transform the marketplace - bringing together two companies with a long history of working together to create a newly unified vision of the future."

- Jonathan Schwartz, CEO, Sun Microsystems, in April 2009.

"It moves Oracle more into the competition with HP and IBM and Microsoft. It makes them a player in the space. It gets hardware, which should be interesting to see since Oracle doesn't make things. It's going to give them access to customers who weren't using the Oracle database."

- Shannon Cross Principal, Cross Research, in April 2009.


On April 20, 2009, Oracle Corporation (Oracle) announced that it had entered into a definitive agreement with Sun Microsystems (Sun) under which it would acquire Sun at a valuation of US$ 7.4 billion. Oracle expected the deal to be closed by the end of September 2009 subject to regulatory approval. The announcement came as a surprise to industry observers who had not even considered Oracle as a probable contender for the acquisition of Sun. Steve Ballmer, CEO of Microsoft Corp, reacting to the deal, said, "I just learnt it. I need to think about it. I am very surprised."

Oracle, a software vendor, provides services like middleware, enterprise solutions, and database solutions. The major products of Sun include high-end servers, Solaris operating systems, Java programming language, and MySQL. After the deal, Oracle would be able to offer its customers a complete system from database to disk which could result in savings to its customers. Commenting on the benefits of the deal, Oracle's CEO Larry Ellison (Ellison) said, "Oracle will be the only company that can engineer an integrated system - applications to disk - where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability, and security go up."...

Two weeks prior to Oracle's announcement of the deal, International Business Machines Corporation (IBM)8 terminated its talks for the acquisition with Sun as the two firms could not come to an agreement on several issues like price and change of management control. Oracle's offer for Sun was US$ 9.5 per share whereas IBM offered US$ 9.4 per share. The small difference in the bid price of Oracle and IBM drew the attention of several analysts to the deal...

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