IBM set to acquire Sun Micro for about $7 billion: report

03 April 2009

US computer and technology giant IBM is close to acquiring high-end computer maker Sun Microsystems in a deal worth around $7 billion, at a much lower price than discussed earlier, The Wall Street Journal reported.

IBM will now pay a reduced price between $9 and $10 a share for Sun Micro against a price of $10 and $11 the two companies were discussing earlier, the report said. The price of Sun Micro shares almost doubled to $8.8 following reports of the deal.

IBM, however, has committed to go through the deal in the face of antitrust scrutiny. The merger, if realised, would be IBM's largest acquisition so far and could prompt an antitrust challenge in the US because a combined IBM and Sun would have a 42 per cent share of the computer server market.

Founded in 1982, Sun is the seventh-largest company in Silicon Valley with reported annual sales of $13.9 billion.

Buying Sun would help IBM widen its lead over Hewlett- Packard Co in the $53.1 billion market for computer servers. (See: IBM bidding to take over Sun Microsystems: report)

IBM would then be the dominant supplier of high-profit Unix servers and related technology.